A SIP (Systematic Investment Plan) calculator helps you calculate the wealth gain and expected returns for your monthly mutual fund investments. It uses the compound interest formula to show you how small regular investments can grow into a massive corpus over time.
The Formula Behind SIP Returns
The mathematical formula used by SIP calculators is:
M = P × (1i^n - 1) / i × (1 + i)
Where:
M = Maturity amount
P = Regular monthly investment
n = Number of payments (months)
i = Periodic rate of interest (annual rate / 12)
Why you should start a SIP early
Because of compounding, the time you stay invested is far more important than the amount you invest. A ₹5,000 monthly SIP started at age 25 will yield a larger retirement corpus than a ₹15,000 monthly SIP started at age 40 (assuming the same 12% return rate).