What is a SIP Calculator and how does it help ?
A SIP (Systematic Investment Plan) Calculator is a free online tool that helps you estimate the future value of your mutual fund investments made through SIPs. It calculates the maturity amount, estimated returns, CAGR, and absolute return based on your monthly investment amount, expected annual return rate, and investment duration.
How is the SIP maturity amount calculated?
SIP returns are calculated using the future value formula for an annuity due, because investments are made at the beginning of each month.
The mathematical formula used is : M = P × [{(1 + i)^n – 1} / i] × (1 + i).
M = Estimated Maturity Amount
P = Monthly SIP Amount
n = Total number of investment months
i = Monthly interest rate (Expected Annual Return ÷ 12 ÷ 100) The WealthDharma SIP calculator automates this complex math for you to provide instant, accurate projections.
What is a Step-Up SIP and why should I use it?
A Step-Up SIP is an investment strategy that allows you to automatically increase your monthly SIP contribution by a fixed percentage every year. For example, if you start with a ₹5,000 SIP and apply a 10% annual step-up, your investment becomes ₹5,500 in year two, ₹6,050 in year three, and so on. Using a Step-Up SIP aligns your investments with your annual income growth and significantly accelerates your wealth creation to beat inflation.
What does CAGR mean in mutual funds?
CAGR stands for Compound Annual Growth Rate. It represents the smooth, annualized rate at which your investment grows over a specific time period. Because actual mutual fund returns fluctuate wildly from year to year due to stock market volatility, CAGR provides a single, steady percentage figure. This makes it easy to compare the performance of mutual funds against fixed deposits or other asset classes.
How much monthly SIP is required to build a ₹1 Crore corpus?
To build a ₹1 Crore corpus in 15 years assuming a 12% annual return, you need a monthly SIP of approximately ₹20,000. However, thanks to the power of compounding, if you extend your investment horizon to 20 years, the required SIP drops to just ₹10,000 per month. You can adjust the “Monthly Investment” and “Investment Period” sliders on our calculator above to find the exact numbers for your personal timeline.
Are SIP returns guaranteed?
No, SIP returns in mutual funds are not guaranteed. They are subject to market risks and depend entirely on the performance of the underlying equity or debt markets. The “Expected Annual Return” in this calculator is an assumed rate for estimation and financial planning purposes only. While long-term equity funds in India have historically delivered around 10% to 14% CAGR, past performance does not guarantee future results.
When should I redeem my SIP mutual fund?
You should ideally redeem your SIP mutual funds only when you have achieved the specific financial goal you started the SIP for, or if you are 1-2 years away from that goal and need to move the money into safer debt funds to protect it from stock market volatility. Other valid reasons include consistent underperformance of the fund (over 2-3 years) or a severe financial emergency. Before redeeming, always check for exit loads and capital gains taxes (STCG and LTCG). For a step-by-step guide on how to withdraw your money, read our complete guide on [How to Redeem Mutual Funds].