# SIP Return Calculator

## What is SIP?

SIP, or Systematic Investment Plan, is an investment strategy that enables investors to contribute a fixed sum regularly into mutual funds. This method not only helps in managing risk but also takes advantage of rupee cost averaging. By investing consistently over time, investors can build wealth gradually, regardless of market volatility. This disciplined approach encourages long-term financial growth, allowing investors to remain focused on their financial goals without being swayed by short-term market movements.

## Formula for SIP Growth:

To calculate the future value (FV) of your SIP investment, you can use the following formula:

FV = P × [(1 + r)^n - 1] / r × (1 + r)

Where:

**P**: Monthly investment amount**r**: Monthly return rate, calculated as (Annual rate / 12 / 100)**n**: Total number of installments, derived from (years × 12)

## Example Calculation:

Let’s consider an example to illustrate how SIP works. Suppose you decide to invest ₹5,000 every month for a duration of 10 years, expecting an annual return of 12%.

- First, we need to calculate the monthly return rate:

**r = (12 / 12 / 100) = 0.01** - Next, calculate the total number of installments:

**n = 10 × 12 = 120** - Now, plug these values into the SIP formula:

**FV = 5000 × [(1 + 0.01)^(120) – 1] / 0.01 × (1 + 0.01)**

After computing this, you’ll find that your final corpus after 10 years would be approximately ₹11.6 lakhs. You have invested a total of ₹6 lakhs (₹5,000 × 120), earning around ₹5.6 lakhs in returns over the investment period.

## SIP Comparison Tool:

To enhance your investment strategy, consider using the above tool that allows you to compare various SIP options based on different investment amounts and return rates over the same timeframe. This can help you make informed decisions tailored to your financial objectives.