What is SIP Calculator?

SIP calculator is a simulation, which allows you to estimate the return on mutual fund investments made through SIP. Investing through SIPs in mutual funds is a popular investment option for millennials. SIP calculators are designed to give potential investors a heads up on their mutual fund investments. However, the actual return from the mutual fund scheme varies depending on several factors. The SIP calculator does not account for the exit load and expense ratio (if any). It is an online tool to calculate the SIP amount to achieve your financial goals, based on an expected annual return.

How does SIP Calculator work?

A SIP plan calculator works by the values entered by the users. You must enter the amount of investment, duration of investment, and the expected returns. The SIP return calculator is designed based on the compound interest formula. The compounded interest powers the mutual fund returns. Sarmaaya SIP Calculator shows the comparison of the returns offered by mutual funds with fixed deposits. You can understand the workings of a SIP calculator with this formula:

Where:
FV = Future Value (the total corpus at the end of the investment period)
P = SIP amount (the fixed investment amount per installment)
i = Periodic interest rate (annual return divided by the number of installments per year, i.e., Annual Rate / 12)
n = Total number of installments (duration of investment in months)