[sip_calculator]
SIP calculations themselves are pretty straightforward. They mainly involve the amount you invest consistently, which is your SIP amount.
For example, if you decide to invest Rs. 1,000 every month, that Rs. 1,000 is your SIP amount.
However, figuring out the total amount you’ll gain from your SIP investment involves a bit more complexity. This is where SIP calculators come in.
These calculators take into account several factors to estimate your future returns:
- SIP amount: It is the fixed amount you invest regularly (like your Rs. 1,000).
- Investment tenure: It is the total period you plan to invest for, like 5 or 10 years.
- Expected rate of return: This is an estimate of how much your investment might grow over time. It’s important to remember that this is just an estimate, and actual returns can vary depending on market conditions.
Based on these factors, the calculator provides an estimated total amount you’ll have at the end of your investment period. This includes your total SIP contributions (money you invested) along with the returns generated on those investments.
Here’s a breakdown of the formula used by SIP calculators (though you don’t necessarily need to memorize it):
-
M = P x (([1 + i]^n – 1) / i) x (1 + i)
- M: Maturity amount (total you get at the end)
- P: SIP amount (your fixed investment)
- i: Periodic rate of return (estimated growth rate)
- n: Number of investment periods (total months you invest for)
These calculators are user-friendly and will estimate your returns based on the information you provide.
