SIP Calculator
Calculate returns from Systematic Investment Plan (SIP)
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Equity funds average: 12-15% | Debt funds: 7-9%
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What is SIP (Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is a disciplined investment strategy that allows you to invest a fixed amount regularly in mutual funds. Instead of investing a large lump sum, SIP enables you to invest smaller amounts at regular intervals - monthly, quarterly, or annually. This approach helps reduce the impact of market volatility through rupee cost averaging and harnesses the power of compounding to build long-term wealth.
How SIP Works
- • Set a fixed investment amount
- • Choose investment frequency (monthly/quarterly)
- • Select mutual fund scheme
- • Automatic deduction from bank account
- • Units allocated based on current NAV
- • Build wealth through compounding
Key Benefits
- • Rupee cost averaging reduces volatility
- • Power of compounding multiplies returns
- • Disciplined investment habit
- • Flexibility to start with small amounts
- • Professional fund management
- • Liquidity and transparency
SIP vs Lump Sum Investment
| Aspect | SIP | Lump Sum |
|---|---|---|
| Investment Amount | Small regular amounts | Large one-time amount |
| Market Timing Risk | Low (Averaged out) | High (Single entry point) |
| Discipline Required | Automated discipline | Self-discipline needed |
| Suitable For | Regular income earners | Large surplus available |
Types of SIP
Regular SIP
Fixed amount invested at regular intervals throughout the investment period.
- • Most common type
- • Consistent investment amount
- • Good for beginners
Step-up SIP
Investment amount increases periodically (annually) by a fixed percentage or amount.
- • Matches salary increments
- • Higher wealth accumulation
- • Beats inflation effectively
Flexible SIP
Allows you to vary the investment amount based on your cash flow and market conditions.
- • Variable investment amounts
- • Suits irregular income
- • Market-based adjustments
SIP Investment Strategies for Different Goals
Short-term Goals (1-3 years)
Recommended Fund Types:
- • Liquid funds
- • Ultra-short duration funds
- • Conservative hybrid funds
Expected Returns:
- • 6-8% per annum
- • Lower volatility
- • Capital preservation focus
Medium-term Goals (3-7 years)
Recommended Fund Types:
- • Balanced hybrid funds
- • Large-cap equity funds
- • Multi-cap funds
Expected Returns:
- • 10-12% per annum
- • Moderate volatility
- • Balanced growth approach
Long-term Goals (7+ years)
Recommended Fund Types:
- • Small & mid-cap funds
- • Sectoral/thematic funds
- • ELSS (tax-saving) funds
Expected Returns:
- • 12-15% per annum
- • Higher volatility acceptable
- • Maximum wealth creation
Frequently Asked Questions about SIP
What is the minimum amount to start SIP?
Most mutual fund schemes allow you to start SIP with as low as ₹500 per month. However, some funds may have higher minimum amounts like ₹1,000 or ₹5,000. The minimum varies by fund house and scheme type.
Can I increase or decrease my SIP amount?
Yes, most fund houses allow you to modify your SIP amount. You can increase, decrease, pause, or even stop your SIP at any time. Some funds also offer step-up SIP where the amount increases automatically every year.
What happens if I miss a SIP installment?
If you miss one SIP installment due to insufficient funds, it's usually not a problem. However, if you miss multiple consecutive installments (typically 2-3), your SIP may get canceled automatically. You can restart it later if needed.
Is SIP better than lump sum investment?
SIP is generally better for most investors because it reduces market timing risk through rupee cost averaging. However, if markets are trending upward consistently, lump sum might give better returns. SIP is ideal for regular income earners who want to build wealth gradually.
What are the tax implications of SIP?
SIP investments in ELSS funds qualify for tax deduction under Section 80C (up to ₹1.5 lakh). For other equity funds, long-term capital gains (after 1 year) above ₹1 lakh are taxed at 10%. Debt funds have different tax treatment with gains taxed as per your income tax slab.
How to choose the right SIP date?
Choose a SIP date that's 2-3 days after your salary credit date to ensure sufficient funds in your account. Avoid month-end dates (28-31) as they might fall on holidays. Many investors prefer 1st, 5th, 10th, or 15th of the month for convenience.
How to Use This SIP Calculator Effectively
Calculator Features
- Monthly Investment: Enter your planned SIP amount
- Current Investment: Add any existing investment value
- Expected Return: Use realistic return expectations
- Investment Period: Your investment timeline in years
- Step-up SIP: Option to increase SIP amount annually
- Yearly Breakdown: Detailed year-wise projection
Planning Tips
- Start Small: Begin with an amount you can sustain
- Be Realistic: Use conservative return estimates (10-12%)
- Consider Inflation: Factor in 6-7% annual inflation
- Regular Review: Reassess your SIP every year
- Step-up Annually: Increase SIP with salary increments
- Stay Invested: Don't stop during market downturns
Important Disclaimer
This calculator provides estimates based on the inputs provided and assumed rate of return. Actual returns may vary depending on market conditions, fund performance, and economic factors. Past performance does not guarantee future results. Please consult with a financial advisor before making investment decisions.