Index Fund Calculator

What is an Index Fund Calculator?

The Index Fund calculator is an online tool that helps you compute and estimate the potential returns from your investment. Due to various factors, actual rates of return on mutual funds can differ among funds. Based on the historical returns, you can estimate an average rate of return and determine the potential total returns. However, the calculator doesn’t guarantee index fund returns. It is just a tool that helps to estimate the potential returns.

Using the SIP index fund calculator, you can make informed comparisons among various SIP options and funds. 

Formula for Calculating Index Fund Returns

You can calculate SIP returns using absolute returns, annualized returns, CAGR, and XIRR. Compound Annual Growth Rate (CAGR) is the most effective method to estimate SIP returns. CAGR is the rate at which an investment grows each year for the entire tenure of the investment. Following is the formula of CAGR:

CAGR = (ending value/beginning value) ^ (1/number of years or months) – 1*100

Where,

Ending value – NAV at the time of withdrawal,

Beginning value – NAV at the time of investment,

No. of months or years – Investment tenure

How Does Scripbox Index Fund SIP Calculator Work?

Scripbox’s Index Fund SIP calculator uses the compound interest formula to estimate returns, factoring in compounding frequency. 

Input your monthly investment, investment duration, and expected SIP rate. The calculator then automatically computes the maturity amount and accumulated wealth. You can also set a target amount for a reverse calculation, determining the monthly investment needed for a specified tenure and growth rate.

How to Use the Scripbox Index Fund Calculator?

Scripbox’s online SIP Index Fund calculator is available for free. You can estimate the potential returns from your Index Fund SIPs at the end of the investment tenure with the help of our Index Fund SIP calculator. 

Scripbox’s Index Fund calculator provides two approaches to estimating the wealth gained and maturity amount.

How to invest in index funds?

Investment Amount Approach

The investment amount approach to estimate potential SIP returns from your index fund investment. This approach is helpful if you know how amount you would like to invest monthly.

• Enter the monthly investment amount
• Next, enter the expected growth rate
• Enter the investment duration in years
• Lastly, input the step-up percentage. Step-up involves annually increasing your investment amount in line with income growth, aiding faster and more systematic achievement of financial goals. Ideally, the step-up percentage should match your annual salary increase.
• The Nifty index fund calculator will automatically estimate the potential gains at the end of the investment tenure. 

You can visualize SIP Maturity Amount through a chart or table. The investment graph illustrates maturity and wealth gained over the tenure, while the table easily identifies the annual Step-Up values (indicated with a blue arrow).

Furthermore, the Scripbox Index Fund calculator estimates maturity amount based on three growth scenarios – Above average returns, average returns and below-average returns.

Target Amount Approach

The target amount approach aids in calculating the monthly investment (SIP) required to reach your financial goal.

• Enter the expected target amount (the amount you wish to earn at the end of the investment tenure)
• Next, enter the expected growth rate
• Enter the investment duration in years
• Finally, enter the step up percentage. Step-up involves annually increasing your investment amount in line with income growth, aiding faster and more systematic achievement of financial goals. Ideally, the step-up percentage should match your annual salary increase.
• The online Index fund SIP calculator will automatically estimate the SIP target amount. 

In the ‘SIP Target Amount Calculation’ table, you can find investment details like years, amount, interest earned, and maturity amount. The table also highlights the annual Step-Up value with a blue arrow.

Also, it is important to know that mutual fund investments are subject to market risks. Hence, you should be mindful of the risks and understand the calculator is just an estimate of the potential returns and doesn’t guarantee them.