Many people ask me questions on my YouTube Channel videos – How SIP Calculator works for Mutual Fund and what will be the returns for 5 years, 10 years or 20 years SIP? Is there any SIP Return Calculator for Next 20 Years? Yes, we have!
SIP (Systematic Investment Plan) means you invest a specific amount every month in a Mutual Fund and get Mutual Fund Units based on the NAV (Net Asset Value) on the day of Investment. If we assume 10% Annual returns on any Mutual Fund and SIP of Rs. 5000 every month, after 1 year of SIP your Investment value will be Rs. 63,351, after 5 years of SIP Investment value will be 3.90 Lacs, after 10 years of SIP Investment value will be 10.33 Lacs, after 15 years of SIP Investment value will be 20.89 Lacs and after 20 years of SIP Investment value will be 38.38 Lacs. These returns will increase based on your SIP Amount and Mutual Fund selected.
I have shared the link of SIP Return Calculator using Excel for next 20 years at the bottom of this post. This SIP Calculator will help you to easily predict your SIP returns for any period, but you should know how SIP calculator works. So continue reading!
- SIP Return Calculator Video using Excel
- What is SIP & How SIP Works
- SIP vs Lump sum Investment
- SIP Benefits & Advantages
- PPF vs SIP Comparison Video
- SIP Return Calculator using Excel
- How SIP Return Calculator helps you
- SIP in Mutual Fund to Save Income Tax
- Mutual Funds Withdrawal
- SIP vs PPF Which is Better
- Conclusion
- DOWNLOAD SIP RETURNS EXCEL CALCULATOR
- Frequently Asked Questions (FAQ)
SIP Return Calculator Video using Excel
What is SIP & How SIP Works
- SIP full form is Systematic Investment Plan. This means you systematically invest specific amount in a disciplined manner every month based on your goals
- The SIP amount you invest is used to buy Mutual Funds units every month
- NAV (Net Asset Value) is the price of the single unit of a mutual fund
- Units Calculation formula is – Units = Investment Amount / NAV
- If NAV = Rs. 100 (price of single unit of a mutual fund), and you invest Rs. 5000, you get 50 Units (Rs. 5000 / Rs. 100) of this mutual fund for this investment
- This way you invest every month and every SIP is considered as fresh Investment. Based on the NAV of the mutual fund, specific number of units gets added to your account
- Watch above video to see the calculation in action using SIP calculator in Excel
SIP vs Lump sum Investment
As mentioned above, SIP is investing in a systematic manner every month, on the other hand Lump sum investing is investing your entire amount in one go instead of investing systematically every month.
- Let’s say you have Rs. 1,20,000 to be invested in a mutual fund
- In SIP, you will divide this amount to be invested over a year so your SIP amount every month will be Rs. 10,000, of Rs. 5000 to be invested over the period of 2 years
- In Lump sum investing, you will invest entire Rs. 1,20,000 in one go, without dividing it into multiple months investment
- The calculation of number of units allocated to you remains same as mentioned above
- But while investing in lump sum, there might be a risk you are taking since you cannot predict market. If market crashes next month after your lump sum investing, your investment value might be negative
- But you might also be rewarded if market goes up after you investment since more units are allocated to you at reduced NAV value of mutual fund
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SIP Benefits & Advantages
- One of the advantages of SIP is you get the benefit of Rupee cost averaging
- Rupee cost averaging – You get more units when market is down and less units when market goes up
- So when market is down, you are still investing and gaining more units. While markets are up, you get less units thus averaging the market conditions
- Another advantage of SIP is you avoid putting entire amount in one go
- This helps you to be stable mentally and psychologically, since you are not investing a huge amount in one go
- One more advantage of investing via SIP is you are working towards a goal gradually
- Always attach you SIPs to a goal you want to achieve whether it is accumulating wealth, child’s further studies, buying a home or a car, etc. Have goals against your SIP you have started
PPF vs SIP Comparison Video
SIP Return Calculator using Excel
You can easily calculate SIP returns using excel document (link at the bottom of post).
This excel will help you know your future SIP returns with just 2 inputs – SIP Amount & Expected Returns.
Examples
Here are the screenshots of some SIP returns:
SIP Amount = Rs. 5000
Expected Returns = 10%
SIP Amount = Rs. 5000
Expected Returns = 12%
SIP Amount = Rs. 10000
Expected Returns = 10%
SIP Amount = Rs. 10000
Expected Returns = 12%
How SIP Return Calculator helps you
- SIP Calculator using Excel will help you to predict your SIP returns for any period of time in future based on your SIP Amount and Expected rate of return in mutual fund
- Usually you’ll get 10% – 12% annual returns in any good mutual fund
- Some best mutual funds can also give you 15% annual growth or more
- Using SIP calculator will also help you see power of compounding via your SIP investments
SIP in Mutual Fund to Save Income Tax
- You can invest in one type of mutual fund called ELSS (Equity Linked Saving Scheme) that helps is saving Income Tax
- ELSS has a lock-in period of 3 years
- You can invest via SIP in ELSS to achieve your goals and save income tax at the same time
How to Save Income Tax
Mutual Funds Withdrawal
- After your SIP investments are complete and you no longer need or want to invest via SIP, you can either choose to stop SIP and redeem (withdraw) all your Units or keep them invested to grow more
- When you redeem the units, it depends whether to sell all the units or partially you can select the number of units to be sold
- Latest NAV of mutual fund will be considered while you sell mutual fund units which we saw in the video at the start of this post
- Total Investment Value = Total Number of Units * Current NAV
SIP vs PPF Which is Better
- SIP in mutual fund and PPF are 2 different investment schemes
- It is a way to invest in mutual fund or stocks or any other investment plan
- PPF (Public Provident Fund) is a Government Backed saving scheme with a lock in period of 15 years
- Both of these are very good as far as Investments are concerned
- SIP in mutual fund will help you accumulate wealth over long run with good average returns in the range 10% – 12% per year. Some best mutual funds might also give you 15% returns per year or more
- On other hand, current PPF interest rate is 7.1% per year
- PPF interest is calculated monthly but is compounded annually, which means you get more interest on already earned interest amount
- PPF can be considered as retirement fund due to guaranteed returns
Maximum Interest in PPF
Conclusion
SIP is the best way to invest in mutual funds as it provides us with Rupee cost averaging benefits. You can easily start a SIP but remember to pin your SIPs against your goals. Once your goals are achieved, you can stop SIP or continue them for wealth accumulation.
On the other hand, lump sum investing is when you want to invest entire amount in one go. But there is a risk in investing lump sum amount over short term. Over long term you can invest via lump sum to get better returns.
You can also have a combination of SIP and lump sum investing. You can invest lump sum amount when market goes down (to get more units) and continue your SIP during normal days of market.
DOWNLOAD SIP RETURNS EXCEL CALCULATOR
Fill below form to download SIP Returns in Excel:
Some more Reading:
- SIP vs Step up SIP Returns on Rs. 2000
- How to Invest in SIP
- How to Save Tax on Salary above 5 Lakh
- Rs. 1000 SIP Returns Calculation for 15 Years
Frequently Asked Questions (FAQ)
What is the Full Form of SIP?
SIP full form if Systematic Investment Plan. Usually SIP is a specific amount you invest every month to achieve specific goals with specific tenure (time period)
How SIP works?
SIP is the specific amount you invest every month for a specific goal with a specific period of time. You invest an amount of let’s say Rs. 5000 every month for 5 years and with expected returns of 10% per year. In this case, after 5 years your expected investment value would be Rs. 3,90,411 according to the SIP returns excel calculator provided above. This makes you a profit of Rs. 90,411 in 5 years and also helps you achieve your goal.
What is lump sum investing?
Lump sum investing means you invest entire amount in one go. Let’s say you have Rs. 1,20,000 to be invested for a year. In SIP, you divide this Rs. 1,20,000 for 12 months (1 year) and invest Rs. 10,000 every year in a mutual fund. On other hand, in lump sum investing, you invest entire amount of Rs. 1,20,000 in first month in one go. This is called lump sum investing.
What is better SIP or Lump sum investing?
Combination of both SIP and Lump sum is better. You can continue with your SIP during normal days and invest lump sum amount if available when market goes down. This way you get more units when market is down and make more profits during market crash.
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
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