1. What is a SIP Future Value Calculator?

Definition: This calculator estimates the future value of systematic investment plan (SIP) payments based on regular investments, interest rate, and time period.

Purpose: It helps investors understand how their regular investments will grow over time with compound interest.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( FV \) — Future value of the investment
• \( P \) — Investment amount per period
• \( r \) — Interest rate per period (in decimal)
• \( n \) — Total number of investment periods

Explanation: The formula accounts for compound interest on each periodic investment over the specified time horizon.

3. Importance of SIP Calculation

Details: Understanding potential returns helps in financial planning, setting investment goals, and comparing different investment options.

4. Using the Calculator

Tips: Enter the periodic investment amount, expected periodic return rate, and total number of periods. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between SIP and lump sum calculation?
A: SIP calculates returns on regular investments, while lump sum calculates returns on a single investment.

Q2: Should I use annual or monthly periods?
A: Match the period to your investment frequency (monthly SIPs = use monthly rate and periods).

Q3: How do I convert annual rate to monthly?
A: Divide annual rate by 12 (e.g., 12% annual = 1% monthly).

Q4: Does this include taxes or fees?
A: No, this calculates gross returns before any deductions.

Q5: What's a realistic expected return rate?
A: Historical equity returns average 10-12% annually, but actual returns vary based on market conditions.