1. What is SIP Calculator?

The SIP (Systematic Investment Plan) calculator estimates the future value of regular investments at a fixed rate of return. It helps investors plan their financial goals by showing the potential growth of periodic investments.

2. How Does the Calculator Work?

The calculator uses the SIP future value formula:

Where:

• \( FV \) — Future Value of the investment
• \( P \) — Principal investment per period
• \( r \) — Rate of return per period (in decimal)
• \( n \) — Number of periods

Explanation: The formula accounts for compound growth of each periodic investment, with the last term (1 + r) adjusting for investments made at the beginning of each period.

3. Importance of SIP Calculation

Details: Understanding the potential growth of regular investments helps in financial planning, setting realistic goals, and maintaining investment discipline.

4. Using the Calculator

Tips: Enter the periodic investment amount (P), expected rate of return per period (r as decimal), and total number of periods (n). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between SIP and lump sum investment?
A: SIP involves regular periodic investments, while lump sum is a one-time investment. SIP helps average out market volatility through rupee cost averaging.

Q2: Should I use annual or monthly periods?
A: The calculator works with any time period, but ensure rate (r) matches your period (monthly rate for monthly SIPs, annual for annual).

Q3: Does this account for inflation?
A: No, the result is nominal future value. For real returns, use inflation-adjusted rate (r).

Q4: What if my SIP amount changes over time?
A: This calculator assumes constant periodic investments. For variable amounts, each period would need separate calculation.

Q5: How accurate are these projections?
A: They're mathematical projections assuming constant returns. Actual market returns will vary.