A SIP (Systematic Investment Plan) calculator is an easy online tool that helps investors estimate the future value of their monthly investments in mutual funds. Instead of guessing returns, a SIP calculator shows clear projections based on your monthly SIP amount, investment duration, and expected rate of return.
How SIP Calculator Works
A SIP calculator uses a compound interest formula to calculate how your money grows over time. In SIPs, you invest a fixed amount every month, and each monthly contribution earns returns at a compounding rate.
The formula used is:
FV = SIP × [( (1 + r)ⁿ – 1 ) / r ] × (1 + r)
Where:
FV = Future Value
SIP = Monthly investment
r = Monthly return rate (annual rate / 12)
n = Total number of months
Some calculators also include lump sum investment, which grows separately using compound interest.
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