What is a SIP?
A Systematic Investment Plan (SIP) is an investment vehicle offered by mutual funds, allowing investors to contribute small, regular amounts (monthly or quarterly) instead of a heavy lump-sum payment. SIPs encourage disciplined saving and benefit from rupee/dollar cost averaging and the power of compound interest.
This calculator computes estimated maturity amounts based on a fixed periodic compounding rate:
$$M = P \times \left[ \frac{(1 + i)^n - 1}{i} \right] \times (1 + i)$$
Where:
- M is the estimated maturity amount.
- P is the monthly contribution.
- i is the periodic rate of interest (expected annual rate / 12 / 100).
- n is the total number of payments (months).
The Power of Cost Averaging & Compounding
SIPs make market volatility work for you. When prices are low, your fixed contribution buys more units; when prices are high, it buys fewer. Over a long tenure, this averages out the cost. Furthermore, compound interest reinvests your returns, accelerating your wealth accumulation exponentially over time.