SIP Calculator
Calculate the wealth gain and future value of systematic index fund or mutual fund investment plans.
Calculator Variables
Calculation Overview
Estimate your future wealth using our Systematic Investment Plan (SIP) calculator. Great for Mutual Funds, Index Funds, and Stock plans.
Mathematical Model & Formula
An ordinary annuity pays at the end of the period, but a Systematic Investment Plan usually triggers contributions at the beginning of each monthly cycle. The extra (1 + i) factor accounts for this extra month of compounding on each deposit.
- FV: Future value / wealth accumulated
- PMT: Monthly SIP payment amount
- i: Monthly interest rate (annual return rate / 12)
- n: Total number of payments (months)
Worked Example Scenario
Scenario: You save $1,000 monthly for 5 years at an annual interest rate of 12%.
- PMT = $1,000, i = 0.12 / 12 = 0.01, n = 5 * 12 = 60
- Evaluate formula: $1,000 * [((1.01)^60 - 1) / 0.01] * (1.01)
- Accumulation factor: [ (1.8167 - 1) / 0.01 ] * 1.01 = 81.67 * 1.01 ≈ 82.486
- Solve final wealth: $1,000 * 82.486 = $82,486
Result: Your total portfolio is valued at $82,486, consisting of $60,000 deposits and $22,486 in interest gains.
Frequently Asked Questions
What is a Systematic Investment Plan (SIP)?
A SIP is a disciplined financial planning approach where you invest a fixed amount in index funds or mutual funds regularly, smoothing out market volatility via dollar-cost averaging.
Academic & Regulatory References
- Bogleheads Methodology on Dollar Cost Averaging → How regular indexing structures compound wealth reliably over long horizons.