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Sip Calculator

SIP Formula:

\[ FV = M \times \frac{(1+r)^t -1}{r} \times (1+r) \]

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months

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1. What is SIP?

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

2. How Does the Calculator Work?

The calculator uses the SIP formula:

\[ FV = M \times \frac{(1+r)^t -1}{r} \times (1+r) \]

Where:

Explanation: The formula accounts for monthly compounding of returns on your regular investments.

3. Importance of SIP Calculation

Details: Calculating the future value helps in financial planning, setting investment goals, and understanding the power of compounding in long-term investments.

4. Using the Calculator

Tips: Enter monthly investment in INR, expected monthly return rate in percentage, and investment period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is the return rate annual or monthly?
A: The calculator uses monthly return rate. For annual rate, divide by 12 (e.g., 12% annual = 1% monthly).

Q2: Are returns guaranteed in SIP?
A: No, returns depend on market performance. The calculator shows projected value based on your input rate.

Q3: What's the advantage of SIP over lump sum?
A: SIP reduces risk through rupee cost averaging and benefits from compounding over time.

Q4: How accurate is this calculator?
A: It provides mathematical projection assuming constant returns. Actual returns may vary.

Q5: Can I change my monthly amount later?
A: This calculator assumes fixed monthly amount. For variable amounts, more complex calculation is needed.

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