1. What is SIP Calculator?

The SIP (Systematic Investment Plan) calculator helps estimate the future value of both lump sum and regular monthly investments considering compound interest. It's useful for financial planning and goal setting.

2. How Does the Calculator Work?

The calculator uses compound interest formula:

Where:

• \( FV \) — Future Value
• \( P \) — Initial lump sum investment
• \( PMT \) — Monthly investment amount
• \( r \) — Annual interest rate (decimal)
• \( n \) — Number of compounding periods per year (12 for monthly)
• \( t \) — Time in years

Explanation: The formula calculates compound growth for both lump sum and regular investments, then combines them.

3. Importance of Investment Planning

Details: Proper investment planning helps achieve financial goals, beat inflation, and create wealth over time through the power of compounding.

4. Using the Calculator

Tips: Enter lump sum amount, monthly investment, expected annual return (conservative estimates recommended), and investment period in years.

5. Frequently Asked Questions (FAQ)

Q1: What's better - lump sum or SIP?
A: Lump sum performs better in rising markets, while SIP reduces risk through rupee cost averaging in volatile markets.

Q2: How accurate are these projections?
A: Projections assume constant returns which rarely happen. Actual returns may vary significantly year to year.

Q3: Should I adjust for inflation?
A: Yes, consider real returns (nominal return minus inflation) for more accurate purchasing power estimates.

Q4: What's a reasonable return expectation?
A: Historically, equities return 10-12%, bonds 6-8%, but future returns may differ.

Q5: How often should I review my investments?
A: At least annually, or when your financial situation/goals change significantly.