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SIP Future Value Formula:
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Systematic Investment Plan (SIP) future value calculation helps investors estimate the potential returns from regular monthly investments in mutual funds. This calculator uses the compound interest formula specifically designed for monthly SIP investments.
The calculator uses the SIP future value formula:
Where:
Explanation: This formula accounts for monthly compounding and the fact that each SIP installment compounds for different periods.
Details: SIP planning helps investors understand the power of compounding and regular investing. It enables better financial planning and goal setting for long-term wealth creation.
Tips: Enter monthly investment amount in INR, expected annual return rate in percentage, and investment period in years. All values must be positive and realistic.
Q1: What is the difference between SIP and lump sum investment?
A: SIP involves regular monthly investments, while lump sum is one-time investment. SIP helps in rupee cost averaging and reduces market timing risk.
Q2: Are the returns guaranteed in mutual fund SIP?
A: No, mutual fund returns are market-linked and not guaranteed. The calculator provides an estimate based on assumed returns.
Q3: What is a realistic annual return expectation for Indian mutual funds?
A: Equity mutual funds historically have delivered 10-15% annual returns over long periods, but this varies by fund type and market conditions.
Q4: How does compounding work in SIP?
A: Each monthly installment compounds separately for the remaining period, creating a powerful wealth-building effect over time.
Q5: Are there tax benefits for SIP investments in India?
A: ELSS (Equity Linked Savings Scheme) mutual funds offer tax benefits under Section 80C with a 3-year lock-in period.