SIP & Compound Interest Calculator
Project Your Wealth
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Total Invested
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Future Value
Total Wealth Gain: --
Understanding SIP & Compound Interest
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a disciplined method of investing in mutual funds. Instead of putting in a massive lump sum all at once, an SIP allows you to invest a fixed amount of money at regular intervals (usually monthly). This strategy leverages rupee-cost averaging and compound interest to build immense wealth over time.
The Formula Behind the Math
To calculate the future value with regular monthly contributions compounded monthly, we use the following standard financial formula:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where P is the principal, r is the annual interest rate, n is the number of compounds per year (12), t is the time in years, and PMT is the monthly payment.
How to Use This Tool
- Initial Investment: Enter the lump sum of money you are starting with (if any).
- Monthly SIP Amount: Enter the amount of money you plan to add to this investment every month.
- Annual Interest Rate: Drag the slider to set your expected yearly return (Long-term Indian equity mutual funds typically average around 12%).
- Time Period: Adjust the slider to see how heavily time impacts your growth! Watch how quickly the wealth spikes in the later years.