SIP Calculator

What Is a SIP (Systematic Investment Plan)?

A Systematic Investment Plan (SIP) is a disciplined way of investing a fixed amount of money at regular intervals, usually monthly. Instead of investing a large amount at once, SIP allows you to invest smaller amounts consistently over time.

SIPs are widely used in countries like the United States, United Kingdom, Canada, and India as a long-term wealth-building strategy. In the US and UK, SIP is similar to monthly investing or dollar-cost averaging.

The biggest advantage of SIP investing is the power of compounding, where your returns also start earning returns over time.

How SIP Investment Works

1. You decide a fixed monthly investment amount (for example $500).
2. This amount is invested every month into a mutual fund or index fund.
3. Over time, your money grows through market returns and compounding.
4. Longer investment duration leads to significantly higher wealth creation.

SIP removes the stress of market timing and helps investors stay consistent, even during market ups and downs.

SIP Calculation Formula (With Example)

• P = Monthly investment amount
• r = Monthly rate of return
• n = Total number of months

Example:
Monthly Investment: $500
Annual Return: 12%
Duration: 10 years (120 months)

Estimated Future Value: ~$116,000

SIP vs Traditional Savings Account

Common SIP Mistakes You Should Avoid

• Stopping SIP during market downturns
• Choosing unrealistic return expectations
• Not increasing SIP amount as income grows
• Investing without long-term goals