1. What is SIP?

SIP (Systematic Investment Plan) is an investment strategy where you invest a fixed amount regularly (typically monthly) in mutual funds. It helps in rupee cost averaging and compounding returns over time.

2. How Does SIP Calculation Work?

The calculator uses the SIP formula:

Where:

• \( FV \) — Future Value of investment
• \( M \) — Monthly investment amount
• \( i \) — Monthly rate of return (annual rate ÷ 12)
• \( p \) — Total number of payments (years × 12)

Explanation: The formula accounts for monthly compounding and assumes investments are made at the beginning of each period.

3. Importance of SIP Calculation

Details: Calculating potential returns helps investors plan their financial goals, understand the power of compounding, and make informed investment decisions.

4. Using the Calculator

Tips: Enter monthly investment in USD, expected annual return in percentage, and investment period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between SIP and lump sum investment?
A: SIP spreads investment over time, reducing market timing risk, while lump sum invests the entire amount at once.

Q2: Are SIP returns guaranteed?
A: No, SIP returns depend on market performance. The calculator provides projected returns based on your inputs.

Q3: How does compounding work in SIP?
A: Returns earned each month are reinvested, generating additional returns in subsequent periods.

Q4: What's a good SIP return rate?
A: Historically, equity funds have returned 10-12% annually, but actual returns vary based on market conditions.

Q5: Can I change my SIP amount later?
A: Most funds allow increasing, decreasing, or pausing SIP amounts, but check with your fund provider.