Introduction

SIP stands for Systematic Investment Plan, which is a method of investing a fixed amount of money in a mutual fund scheme at regular intervals.

SIP calculator is a tool that helps you calculate the expected return on your SIP investment.

How it works

To use the SIP calculator, you will need to input the following details:

• SIP amount: The fixed amount of money that you want to invest on a regular basis.
• Expected rate of return: The rate of return you expect to earn on your investment.
• Time period: The number of months or years for which you want to invest. The calculator will then calculate the expected return amount at the end of the tenure. It will also provide a detailed breakdown of the returns, including the interest earned and the principal amount.

Formula

The formula used by the SIP calculator is:

Expected return = SIP amount x (1 + expected rate of return)^(time period)

Tax Benefits

SIP investments in Equity-linked Savings Scheme (ELSS) are eligible for tax benefits under Section 80C of the Income Tax Act. This means that investments up to a maximum of Rs. 1.5 Lakh per financial year are eligible for tax deductions.

Alternatives

Instead of SIP, one can also invest in a lump sum in mutual funds. This method is called a lump-sum investment and is suitable for people who have a large amount of money to invest at once.

Conclusion

SIP is a great way to invest in mutual funds as it allows you to invest small amounts regularly and build wealth over time. With the help of SIP calculator, it becomes easy to estimate the returns on your investment, keeping in mind the expected rate of return, time period and SIP amount.