SIP Calculator

SIP Laddering is a smart investment strategy where you start multiple SIPs with different maturity periods to create a continuous stream of cash flow.

How it works:

Instead of one large SIP of $10,000 for 10 years, you could split it into:

• SIP 1: $3,000 for 3 years (Short-term goal)
• SIP 2: $3,000 for 5 years (Medium-term goal)
• SIP 3: $4,000 for 10 years (Long-term goal)

Benefits:

1. Liquidity: You get money back at different intervals without breaking your long-term investment.
2. Goal Alignment: Maps perfectly to different financial goals like buying a car (3 years), house down payment (5 years), and retirement (10+ years).
3. Averaging: Spreads your entry risk across different market cycles.

A SIP (Systematic Investment Plan) calculator is a powerful tool that helps you estimate the returns on your mutual fund investments. By entering your monthly investment amount, expected annual return rate, and time period, you can visualize how small, regular contributions can grow into a significant corpus over time due to the power of compounding.

SIP (Systematic Investment Plan):

• Best for: Salaried individuals with regular income.
• Benefit: Rupee Cost Averaging (buys more units when market is down, fewer when up).
• Risk: Lower risk due to averaging.

Lumpsum Investment:

• Best for: those with a large windfall (bonus, property sale).
• Benefit: Potential for higher returns if invested during a market low.
• Risk: Higher risk of timing the market wrong.

Our calculator focuses on SIPs, but many investors use a mix of both strategies.

Albert Einstein called compound interest the 'eighth wonder of the world'. In SIPs, you earn returns not just on your principal amount, but also on the returns generated by that principal. Over long periods (10+ years), the interest component often exceeds the total amount you actually invested. The key is to start early and stay invested.

You can easily calculate the future value of your SIP investment in Microsoft Excel or Google Sheets using the FV function.

Formula: `=FV(rate, nper, pmt, [pv], [type])`

• rate: Monthly interest rate (Annual Rate / 12)
• nper: Total number of months (Years * 12)
• pmt: Monthly SIP amount (Enter as negative value)
• pv: Present Value (0 if starting fresh)
• type: 1 (for payment at the beginning of the period)

Example:

To calculate returns for $5,000 monthly SIP at 12% annual return for 10 years:

`=FV(12%/12, 10*12, -5000, 0, 1)`

This will give you the maturity amount instantly.

1. Stopping during market crashes: This is actually the best time to accumulate units at lower prices.
2. Not stepping up: As your income grows, your SIP amount should too. Even a 10% annual step-up makes a huge difference.
3. Setting unrealistic expectations: Equity markets typically return 12-15% over the long term; expecting 50% consistently is risky.