A systematic Investment Plan or SIP helps you make small investments in mutual funds at regular intervals to grow your money in the smartest way possible. A SIP calculator is an online tool that helps you estimate the returns from your SIP investment. Use our SIP calculator to see how much your investment can grow if you invest today.
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A SIP Calculator is an online tool that estimates the return from a SIP investment. The calculator works on the inputs given by the user. It requires simple inputs like investment amount or target amount, expected rate of return, investment tenure, and step-up rate. Scripbox’s SIP calculator gives the output in both graphical and chart format. The investment amount, potential capital gains and maturity amount are clearly shown.
The calculator works on the investment amount approach and target amount approach. The investment amount approach is the most used one where the investor inputs the investment amount, return expected, tenure and step-up amount. The target amount approach uses the target amount the investor wants to achieve in the said duration to estimate the current investment required.
Scripbox’s SIP calculator estimates the return in terms of maturity amount based on three different growth scenarios. They are above average, average, and below-average.
It is to be noted that the SIP calculator only gives an estimate based on the inputs provided. The SIP Calculator doesn’t guarantee any returns. The return from any mutual fund depends on the performance of the fund. Also, the actual return from the mutual fund investment can be higher or lower than the estimate provided by the SIP Calculator.
The mutual fund SIP calculator estimates potential return using the compound interest formula. The calculator takes into account the number of times compounding is applicable and estimates the potential returns. Furthermore, the SIP calculator requires one to enter the monthly amount they want to invest, the duration of the investment (in years) and the expected rate of return on the SIP.
The online SIP calculator will automatically calculate the maturity amount and also the wealth to be gained from the mutual fund investments. One can also choose to enter the target amount matching their financial goal and reverse calculate the monthly amount to be invested for the given tenure and rate of growth.
SIP return can be calculated using absolute return, annualized returns, CAGR, and XIRR. However, CAGR is the most effective method to estimate SIP returns. CAGR or Compound Annual Growth Rate 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
Ending value is the NAV at the time of withdrawal,
Beginning value is the NAV at the time of investment.
A number of months or years is the tenure of the investment.
Mr Anudeep has invested INR 2,52,000 (INR 3,000 a month) in a mutual fund when the NAV is INR 20. At the time of withdrawal after seven years, the NAV is INR 50. Using the CAGR formula, we can estimate SIP returns for Mr Anudeep.
CAGR =(ending-value/beginning – value) ^ (1/number-of-years) – 1* 100
CAGR = (((50/20) ^ (1/7)) – 1) * 100
Compounded Annual Growth Rate = 13.98%
This means the investment has grown 13.98% each year for a tenure of 7 years. The return will remain the same in terms of months as well.
CAGR = (((50/20) ^ (12/84)) – 1) * 100
CAGR = 13.98% ~ 14%
Hence the investment of INR 2,52,000 will grow to INR 4,29,076 in 7 years.
While investing, everyone is curious to estimate their potential returns. Estimating returns ensures the investor whether or not the chosen SIP will help them realize their financial goals or not.
Scripbox’s online SIP calculator is available on our website. One can estimate the potential returns on their SIPs at the end of their investment tenure with the help of our SIP calculator. Scripbox’s SIP calculator provides two approaches to estimating the wealth and maturity amount, i.e. ‘Investment Amount’ and ‘Target Amount’.
The investment amount approach to estimate potential SIP returns will help individuals who know how much they like to invest monthly. Under this approach, one has to follow the below steps to determine their potential returns:
The calculator will automatically estimate the potential gains at the end of the investment tenure. Also, one can view the calculation of SIP Maturity Amount either in a chart or table form. The investment graph provides a visualization of the maturity amount and the wealth gained during the investment tenure. In the table format, one can easily identify the Step-Up value every year (indicated with a blue arrow).
Furthermore, the Scripbox SIP calculator estimates maturity amount based on three growth scenarios – Above average returns, average returns and below-average returns.
The target amount approach helps in estimating the monthly investment (SIP) amount one needs to invest to achieve their financial goal. However, for this, one should know the final amount they wish to have at the end of the investment tenure. Under this approach, one has to follow the below steps to determine the monthly investment amount:
The online SIP calculator will automatically estimate the SIP target amount. Also, in the ‘Calculation of the SIP target amount’ table, one can find the details of their investments. Such as years, investment amount, interest earned and maturity amount. Furthermore, in the table, one can easily identify the Step-Up value every year (indicated with a blue arrow).
Furthermore, it is important to know that mutual fund investments are subject to market risks. Hence, investors should be mindful of the risks and understand the calculator is just an estimate of the potential returns and doesn’t guarantee them.
Research and analysis are necessary before making an investment decision. Also, one must estimate the potential returns before investing to analyze if it is a profitable investment opportunity or not. Furthermore, it is essential to make sure the financial objective of the investor and the investment objective of the asset are aligned. This enables investors to choose the right asset that will help them realize their goals faster.
Let us now see how can the SIP return calculator help you:
The SIP mutual fund investments can be made in the following 3-steps:
Based on the type of mutual funds capital gains from SIPs attract long term and short term capital gains tax. Each SIP instalment be taxed based on the holding period.
Equity mutual funds attract short term capital gains if the investment holding period is less than one year. The short term capital gains are taxed at 15%. On the other hand, if the holding period is more than one year, the long term capital gains above INR 1,00,000 are taxed at 10%.
For debt mutual funds if the investment holding period is less than 3 years, the short term capital gains are added to the investor’s total taxable income and are taxed as per the applicable IT slab rates. On the other hand, if the holding tenure is more than three years, the long term capital gains are taxed at 20%.
From April 1st 2023, capital gains from debt mutual funds will be taxed as per the investor’s IT slab rate, irrespective of the investment holding period. Thus, the LTCG benefit will no longer be available for debt mutual funds.
Here are the most common mistakes that you should avoid while investing through SIPs:
SIP is a popular way of investing in mutual funds. SIP account will help you invest a fixed amount at regular intervals in a mutual fund. To set up a SIP account, you will have to first shortlist a mutual fund, complete the KYC procedure with the fund house or intermediary. Next, choose the SIP frequency, SIP amount and set up a bank mandate for regular payments (auto-debit). This is a disciplined way of investing, and you do not have to worry about timing the market.
SIP is a way of investing a fixed amount at regular intervals in a mutual fund. Through SIP investing, you can purchase units of a mutual fund for the specified amount on a given date each month. SIP investing is an automated way of investing and doesn’t require you to invest each time manually. However, you will have to provide a SIP bank mandate to automate your investments.
The different types of SIPs are:
1. Regular SIP– The simplest type of SIP that lets you invest a fixed amount at regular intervals. You can choose a suitable investment frequency for your SIPs: monthly, bi-monthly, quarterly or half-yearly.
2. Top-up SIP– This SIP allows you to increase your SIP amount periodically.
3. Flexible SIP– This type of SIP allows you to alter your investment amounts. You have to inform the fund house regarding the SIP amount at least a week before the SIP instalment date.
4. Perpetual SIP– While starting the SIP investments, you will have to mention the tenure of the SIP in the application form. If no tenure is mentioned, then it is considered as a perpetual SIP. As a result, the SIP will continue till you give any specific instruction to stop it.
5. Trigger SIP– You can set a SIP date, redeem or switch the SIP once the trigger for the event occurs.
SIP with Insurance: Certain fund houses offer insurance for SIP investments if the investment durations are for a long period. The initial insurance cover is about 10 times the first SIP amount and increases gradually with time.
6. Multi SIP– You can invest in multiple schemes of the fund house through a single instrument.
To calculate SIP returns manually you have to be familiar with the future value formula.
FV = P [(1+i)^n-1]*(1+i)/i
FV = Future Value of your SIP in mutual funds
P = SIP amount you invest in mutual funds
i = compounded rate of return
n= Investment duration in months
The returns are compounded for every SIP instalment.
Alternatively, you can use the XIRR function in an excel sheet to compute SIP returns.
Often, computing SIP returns manually can be a cumbersome process. You can estimate the potential returns from SIP within seconds using Scripbox’s SIP Calculator.
For SIPs, cash inflows and outflows may not be equal and sometimes can be irregular. Therefore, it is advisable to use XIRR to compute returns from SIP. CAGR computes point-to-point returns and is hence not suitable for calculating SIP returns. However, CAGR can be used for computing returns from lumpsum investments. XIRR is an Excel (or on any other spreadsheet app) function that will help you compute annualised returns for your SIP tenure.
You can calculate the CAGR by using the following formula:
CAGR = (ending value/beginning value) ^ (1/number of years or months) – 1*100
Ending value is the NAV at the time of withdrawal,
Beginning value is the NAV at the time of investment
Number of months or years is the tenure of the investment
There is no ideal SIP amount for investment. The SIP amount entirely depends on your financial position, investment tenure and goal. Therefore, the amount differs from investor to investor. Hence, you should identify your goal, corpus you wish to create, duration to achieve the goal and compute the SIP amount accordingly. You can leverage online tools to identify the right SIP amount for your investment goal. Try goal-based investing from Scripbox. It helps with hassle-free investments.
There is no minimum or maximum tenure for SIP investments. The tenure depends on your investment objective. Furthermore, when investing in equity mutual funds, it is advisable by experts to invest for at least 3 to 5 years. Since equity funds invest in stocks, they are volatile. Therefore, longer investment durations help you average out the volatility and generate significant returns.
Yes, you can increase your SIP amount. Top-up or Step-up SIP will help you increase your SIP investment amount periodically. While starting your SIP investments, you can opt for the top-up or step-up option in the application form and give the instructions accordingly. Also, Scripbox will allow you to step up your investments at any time.
You can log in to the mutual fund house page using your folio number or PAN number. Select the scheme and amount or number of units you wish to redeem. Upon successful redemption, the amount will reflect in your bank account. Furthermore, if you have invested through an online portal like Scripbox, you can directly redeem from their portal by logging in and selecting the scheme.
You can build your INR 1 crore with any SIP amount. However, the smaller the amount, the longer will be the duration to create the 1 crore corpus. For example, you can build a corpus of INR 1 crore with a SIP amount as low as INR 5,000 in 19 years. However, if your SIP amount is higher, say, INR 20,000, you can achieve your goal in just 12 years.
Firstly, download the Scripbox App from App Store or Play Store. Next, create your profile, and complete the KYC procedure that is completely online and paperless. To proceed, complete the registration process by providing all the necessary details. Choose the plan that you wish to invest in, select the SIP option and invest. Investing through Scripbox is as easy as online shopping and can be done within a couple of minutes.
You can stop your SIPs directly through the AMC website. Login to the fund house website, select the SIP you wish to cancel and click on ‘Cancel SIP’. It takes up to 21 working days to process the request. Alternatively, you can also cancel the SIP offline by communicating to the AMC and filling a form. Furthermore, if you invested through online platforms, you can cancel the SIP directly from their portal.
Yes, you can renew the SIP before its expiration date. You have to provide the renewal instructions at least 30 working days before the last SIP date. However, even if the SIP expires, you can renew it by providing the folio number of the SIP. The renewal may take up to 21 to 30 days to process the form and re-starting the SIP.
The answer lies in your own investment goals and cash flows in hand. If you have a huge amount with you and you are looking for an investment opportunity, you can consider investing a lump sum amount in mutual funds.
However, if you are looking for a disciplined investment over a period of time with a fixed amount, you can opt for the Systematic Investment Plan (SIP) mode of investment. You can refer to our complete guide on how to choose between SIP and lumpsum mode on investment.
The decision of FD vs SIP or which is better FD or SIP depends on the objectives of an investor, type of investment solution, and the understanding or acceptance of risk. There are multiple common grounds on which you can compare both the options like returns, liquidity, tax, investment objective, and risk. An investor who wants to invest in a secure and pre-determined interest providing an investment option can consider FD.
Whereas an investor who is ready to accept market fluctuations associated with mutual funds can invest in a fund through SIP. You must compare both options and choose the option that suits your investment objectives.
SIP is a method of investing in a mutual fund. The taxability of mutual funds depends on their type and the period of investment. So, a SIP is not always tax-free. If you invest in an equity-linked saving scheme ELSS mutual fund, the returns will be tax-free. If you invest in equity mutual funds and invest for 12 months, you will receive short-term capital gain and pay tax @ 15% + cess + surcharge. However, if you stay invested for more than 12 months, then you will earn long-term capital gains and pay tax @ 10% + cess + surcharge if the gain is more than Rs 1 lakh.
Now, let’s say you invest in debt funds and withdraw before 36 months, then you will earn STCG and pay tax at the slab rate applicable. However, if you withdraw after 36 months of investments, then the LTCG will taxable at the rate of 20% + cess + surcharge.
From April 1st 2023, capital gains from debt mutual funds will be taxed as per the investor’s IT slab rate, irrespective of the investment holding period. Thus, the LTCG benefit is no longer available for debt mutual funds.
To have a corpus of 1 crore in 5 years, you need to invest ₹ 1,28,070 per month. Here, the expected growth rate is assumed to be 10%.
If you invest 3,000 for 5 years, you will have a corpus of ₹ 2,34,247. Potential gains of ₹ 54,247 on your investment of ₹ 1,80,000. Here, the expected growth rate is assumed to be 10%.
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