# What is SIP?

**What is a SIP Calculator?**

A SIP (**Systematic Investment Plan**) calculator is a simple tool that allows individuals to get an idea of the returns on their mutual fund investments made through SIP. SIP investments in mutual funds have become one of the most popular investment options for millennial lately.

These mutual fund sip calculators are designed to give potential investors an estimate on their mutual fund investments. However, the actual returns offered by a mutual fund scheme varies depending on various factors. The SIP calculator does not provide clarification for the exit load and expense ratio (if any).

This calculator will calculate the wealth gain and expected returns for your monthly SIP investment. Indeed, you get a rough estimate on the maturity amount for any of your monthly SIP, based on a projected annual return rate.

**How can a SIP return calculator help you?**

SIPs are a more lucrative mode of investing funds compared to a lump sum amount according to several mutual fund experts. It helps you become financially disciplined and create a habit of savings that can benefit you in the future.

A SIP calculator online is a beneficial tool, which shows the estimated returns you will earn after the investment tenure.

Few of the benefits of SIP calculators include –

- Assists you to determine the amount you want to invest in.
- Tells you the total amount you have invested.
- Gives an estimated value of the returns.

**How do SIP calculators work?**

A SIP plan calculator works on the following formula –

M = P × ({[1 + i]n – 1} / i) × (1 + i).

In the above formula –

- M is the amount you receive upon maturity.
- P is the amount you invest at regular intervals.
- n is the number of payments you have made.
- i is the periodic rate of interest.

Take for example you want to invest Rs. 5,000 per month for 60 months at a periodic rate of interest of 13%.

then the monthly rate of return will be 13%/12 = 0.0108

which gives Rs 1,24,017 Rs approximately in 5 years.

The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.

Please read the offer documents carefully before investing. Subject to market risk.

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