Mutual Fund Calculator Groww

Future Value of SIP Formula:

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

Future Value (FV):

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1. What is SIP Mutual Fund Calculator?

The SIP (Systematic Investment Plan) Mutual Fund Calculator helps investors estimate the future value of their regular investments in mutual funds. It uses the future value of annuity formula to project potential returns based on monthly contributions, expected rate of return, and investment duration.

2. How Does the Calculator Work?

The calculator uses the SIP future value formula:

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

Where:

\( FV \) — Future Value of investment
\( P \) — Monthly SIP amount (₹)
\( r \) — Monthly rate of return (annual rate ÷ 12)
\( n \) — Total number of payments (months)

Explanation: This formula accounts for compounding returns on regular monthly investments, where each installment grows at the specified rate for the remaining investment period.

3. Importance of SIP Planning

Details: Systematic investment planning helps in wealth creation through disciplined investing, rupee cost averaging, and the power of compounding. It allows investors to achieve long-term financial goals with manageable monthly contributions.

4. Using the Calculator

Tips: Enter monthly SIP amount in rupees, expected annual rate of return in percentage, and investment duration in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the advantage of SIP over lump sum investment?
A: SIP helps in rupee cost averaging, reduces market timing risk, and makes investing more affordable through smaller regular contributions.

Q2: Are the returns guaranteed?
A: No, mutual fund returns are market-linked and not guaranteed. The calculator provides estimates based on assumed rates of return.

Q3: How often should I review my SIP investments?
A: Regular quarterly or annual reviews are recommended to ensure your investments align with your financial goals and risk tolerance.

Q4: Can I change my SIP amount later?
A: Yes, most mutual funds allow you to increase, decrease, or pause your SIP contributions as per your financial situation.

Q5: What factors affect mutual fund returns?
A: Market conditions, fund management, economic factors, expense ratios, and investment duration all impact mutual fund returns.