How to Use the SIP Calculator | TapFreeTools Tutorial

Master Wealth Building with the SIP Calculator

Systematic Investment Plans (SIPs) allow individuals to invest fixed amounts regularly in mutual funds. This calculator helps illustrate how periodic investments may grow over time based on the variables you choose. It provides an easy way to visualize the long-term impact of consistency and compounding.

Complete Step-by-Step Guide

Step 1: Enter Your Monthly Investment Amount

Begin by entering the amount you plan to invest each month. SIPs are designed to accommodate small or large contributions depending on personal preference and affordability.

Guidance for selecting your SIP amount:

Review your monthly income and expenses
Determine a comfortable investment amount
Start with an amount suitable for long-term consistency

Example: With a take-home salary of ₹50,000, an individual may choose a SIP of ₹5,000.

Step 2: Select Your Investment Duration

Choose how long you want to continue your SIP contributions. Longer durations often show a more pronounced effect of compounding.

Common horizons include:

5–7 years: Shorter financial goals
10–15 years: Medium-term plans
20–30 years: Long-term objectives

While SIPs can be discontinued anytime, longer durations typically allow investments to experience market cycles fully.

Step 3: Enter Expected Annual Return Rate

Select an estimated rate of return. Historical averages can provide a reference, but actual returns depend on market performance.

Equity Mutual Funds: Historically around 12–15% over long periods
Debt Mutual Funds: Typically around 6–8%
Hybrid Funds: Often around 9–11%

Note: The calculator provides estimates and is not a prediction of future results.

Step 4: Review Your Projected Wealth

After entering all details, the calculator displays:

Total Investment: Sum of all SIP contributions
Estimated Returns: Growth based on expected rate
Final Corpus Value: Value at the end of the chosen duration

A visual breakdown shows how contributions and growth contribute to the overall amount.

Real-World Examples

Example 1: Long-Term Planning

Profile: Rahul, 25 years old

Monthly SIP: ₹5,000
Duration: 30 years
Expected Return: 12%

Illustrative Output:

Total Invested: ₹18,00,000
Estimated Growth: Shown by calculator
Final Corpus: Based on compounding

Example 2: Medium-Term Planning

Profile: Priya, 35 years old

Monthly SIP: ₹15,000
Duration: 20 years
Expected Return: 12%

Illustrative Output:

Total Invested: ₹36,00,000
Projected returns shown by calculator

Advanced Features: Step-Up SIP

Some investors increase their SIP amount annually. This feature, known as a "step-up SIP," allows contributions to grow gradually.

Example: A 10% annual increase on a ₹5,000 SIP results in:

Year 1: ₹5,000/month
Year 2: ₹5,500/month
Year 3: ₹6,050/month

This strategy demonstrates how contribution growth can impact long-term outcomes.

Common Mistakes to Avoid

Stopping SIPs during market dips: SIPs are designed to average out market fluctuations.
Underestimating duration: Longer periods highlight compounding more clearly.
Not adjusting SIP amount over time: Increasing contributions can enhance results.
Choosing funds without research: Different goals may suit different fund types.

Tax Benefits of SIP

SIPs into ELSS (Equity Linked Savings Scheme) may offer tax benefits under Section 80C, subject to limits and rules.

When to Start Your SIP?

SIPs can be started at any time. The calculator helps illustrate how early and consistent investing may support long-term goals.

Use the SIP Calculator to explore projections for your investment plans.