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What is SIP Calculator?

Financial planning involves numbers. When you try to make sense of them, you realise that they answer many money questions with simple mathematics. There are a lot of calculators you can use to make your number-crunching simple. One among them is a SIP calculator.

Systematic Investment Plans or SIPs are a popular way to invest. Small contributions from individuals are helping households manage their finances through disciplined investing. When you start a SIP, a fixed amount is invested quarterly, monthly or annually based on your choice. SIP is helpful if you wish to shield your funds from short-term volatility in the market.

The SIP Calculators thus come in handy for getting a fair estimation of the investment returns before you invest or during the period of your investment in mutual funds.

Systematic Investment Plan calculator is an online financial tool. It shows you how much you would have to invest each month to reach your targeted corpus. Thus, it acts as a road map for you to achieve your numerous financial objectives. These SIP calculators, also known as mutual fund SIP calculators, help complete complex financial calculations quickly. The SIP calculators are designed to give a reasonable estimate of the returns on your mutual fund investments. However, the actual returns of the mutual funds may differ. These are calculators that give you an estimate. They cannot predict returns based on the market movement of underlying shares. Further, the SIP calculator does not take into account the expense ratio.

What are the types of SIPs available?

  • Regular SIP – It is the most common type of SIP investors opt for. You can make fixed SIP contributions at fixed time intervals – monthly, quarterly, or half-yearly. You cannot change your SIP amount at any point.
  • Flexible SIP – This SIP works similarly to a regular SIP. You can make fixed SIP contributions at fixed time intervals. Here, you can change the SIP contribution amount at any given time. This allows you to cater to your changing affordability.
  • Step-up or Top-up SIP – This type of SIP allows you to increase your contribution at fixed intervals, giving you the chance to make the most of a favourable market positioning.
  • Perpetual SIP – This particular SIP continues indefinitely. You make contributions towards your corpus as long as you wish to.
  • Trigger SIP – Here you make a SIP contribution only when a particular market situation occurs. For instance, you could start making SIP contributions when a share price reaches a certain value.

How do SIP Calculators work?

The compound interest formula is used in SIP calculators to compute SIP returns. The formula is-

M or FV= P ({[1 + i] n – 1 / i) * (1 + i)

In the above formula,

FV/M= The future value or the maturity amount

P= amount invested at regular intervals

n= number of payments made

i= (rate of interest)/ 100

The mutual fund SIP calculator usually requires three inputs-

1) The tenure of your investment

2) Periodical investment amount

3) The expected returns per annum

You can make mutual fund investments through SIP and lump sum investments. Thus, the online calculators are also of two types, the SIP calculator and the lump sum calculator. The only difference here is that the lump sum calculator helps estimate the returns on a lump sum investment. In contrast, the mutual fund SIP calculator generates estimates of returns on systematic periodic investments.

For instance, you are investing Rs.5000 per month for ten years (120 months). The expected rate of return for this mutual fund is at 10% p.a. Now, when you use the SIP calculator, you will need to input this information. The calculator displays a total corpus value of Rs.10,32,760 on a total principal of Rs.6,00,000. If you wish to increase the investment value to Rs.6000 per month, then the returns would increase to Rs.12,39,312, and your invested principle would be Rs. 7,20,000.

Some SIP investment calculators also ask for an additional input called the ‘Adjust for inflation’ button. Here, you can input the expected rate of inflation for the duration of your investment.

How can a SIP calculator help you?

  • Determine a SIP amount – Determining the SIP contribution amount should be done carefully. It should be within your budget and capable of taking you a step closer to your goals. The SIP calculator comes in handy in determining a suitable SIP amount.
  • Understand the impact of the holding period – The holding period is the time you stay invested in your Mutual Fund. A longer holding period translates to better returns, however, involves a high degree of risk. The SIP calculator helps you understand the impact of various holding periods on the returns you will reap and make a suitable choice.
  • Offers a clear breakdown – The SIP calculator gives a clear-cut breakdown of your total contribution and the returns you will reap. This gives you a chance to assess the value a particular Mutual Fund holds and make informed investment decisions.

How to use the ICICI Direct SIP calculator?

Using the ICICI Direct SIP calculator is very simple. The calculator has such an easy user interface that almost anyone can use it to determine their investment returns. Follow the below-mentioned steps to use the SIP calculator:

  • Run a quick online search for the ICICI Direct website.
  • Look for the ‘Calculators’ tab on the home page of the website and select financial calculator SIP from the various options displayed on your screen.
  • Enter the SIP contribution you would like to make every month. You can use the slider to enter any amount within the range of 0 to Rs 10 lakh.
  • Set the expected return rate at which you would expect your Mutual Fund investment to reap returns. Note that the expected rate is subject to change. There is no guarantee of the returns you will reap. Have realistic expectations from your investments. Here as well you can use the slider to set the expected return rate anywhere between 0 to 15%.
  • Next, you need to set your tenure of investment. There are no set rules for Mutual Fund investment tenure. You can invest for any tenure you wish to. The general advice is to stay invested for a longer time to maximise returns. The calculator allows you to calculate returns for any tenure between 0 to 15 years.
  • Once you have entered all necessary variables the tool will take a couple of minutes to process all data. It will then provide you with accurate results.
  • The calculator typically reflects the total maturity value at first. It is the addition of your principal investment and returns. This will give you a fair idea of the value the investment offers.
  • There will also be a pie chart, giving you a graphical representation of your investment returns. The principal amount and estimated returns will be shown in contrasting colours for clear understanding.
  • Now in case you wish to make changes to your investment variables, be it to the monthly contribution or tenure, you can easily do so using the sliders. This feature of the SIP calculator allows you to consider various variations and make an investment that’s best suited for you.
  • Even the slightest change made to the investment variables will reflect immediately in the total maturity figure and its graphical representation. Use the calculator firsthand to understand it’s working much better!

Example of using a SIP calculator

Akash is a young professional who has just started his career in the field of finance. He has several goals in his mind and is working towards them by making suitable investments. Given Mutual Funds have tremendous potential to earn inflation-beating returns he decides to invest in them. Since he is a salaried individual, he thinks SIP is the best investment mode for him. He opts for regular SIP to build his corpus.

Initially, he considers investing Rs 5,000 every month for a tenure of 10 years at an expected rate of 8%. He feeds in these variables in the SIP calculator and obtains accurate results within seconds. The calculator reflects he will receive Rs 9,22,917 on the investment’s maturity.

However, his goal is to at least accumulate Rs 15 lakhs within 10 years at the same expected rate. He now uses the calculator to consider different variations of variables. Ultimately the SIP calculator helps him determine a suitable SIP contribution amount.

Akash has to contribute Rs 8,127 every month for 10 years. The Mutual Fund will grow at an expected rate of 8% and approximately earn him Rs 15,00,109 on maturity.

The example clearly depicts how the SIP calculator simplifies Mutual Fund investment calculation and aids in better financial planning.

Benefits Of SIP Calculator Online

1) The systematic investment plan calculator facilitates obtaining a close estimate of the amount accumulated after completing periodic payments for the desired tenure.

2) Estimating future value or the maturity amount will let you choose the most suitable mutual fund scheme.

3) The SIP calculator has a user-friendly interface and is easily accessible. It saves your time to a great extent when in need of performing complex calculations.

4) The SIP calculator provides both graphical and tabulated representations of the return estimations for you to make better-informed decisions before investing. 

5) The SIP calculator online gives you estimates using three different growth scenarios like above-average, average, and below-average returns. You can pick a strategy that best fits your needs and begin investing. 

6) Using the free online SIP calculator, you can examine numerous return scenarios and make an appropriate investing decision. 

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To start a SIP online:

  1. You need to visit the website of a particular fund house. There, you have to complete the KYC procedure and select the SIP you want.
  2. Click on ‘register now’ and fill the application form that pops up to register a new account. Provide a username and password for your online transaction.
  3. Give details of the specific bank account from which the SIP payments will be debited regularly.
  4. After the registration process, select the scheme you like
  5. The investment starts after the fund house sends a confirmation, and the SIPs generally begin after 35-40 days.

You can continue your SIP payments for as long as you willingly invest. Apart from the usual plans, perpetual SIPs permit an indefinite tenure of investment.

The minimum amount required to start a SIP varies depending on the particular scheme of a mutual fund. The minimum amount may be as low as Rs.100. There is no upper ceiling on the amount of SIP investment. 

Yes, you can modify your SIP amount. You can either start a new SIP for the additional amount or create a new SIP with an amount higher than the previous one if you wish to increase the SIP amount. Conversely, suppose you want to decrease your SIP amount. In that case, you can either start a new SIP with a lower amount or contact your AMC (asset management company) about the same.

You can pause your SIP for sure without any extra charges. You can withdraw your investment by redeeming the available units. However, some schemes have a lock-in period. You may also charge an exit load on withdrawal based on the exit load policy of the mutual fund scheme.

The auto-debit feature won’t let you miss an instalment. However, if there are no sufficient funds in the bank account and you happen to miss one SIP instalment, there will be no penalties or fees. The SIP will also stay operational. But, if you miss multiple instalments, the SIP will then be cancelled. 

There is no specific formula for the selection. You can select a date at the beginning of the month or a day after your salary is credited. The other option could be to choose a date towards the month-end. You can also toss a coin or select your lucky date because, unlike the general notion, the SIP has negligible significance over the long term. When investing in mutual funds through SIP, it does not matter on which date of each month you had invested.

If you've started a SIP online, you can terminate it at any time. You'll need to enter your credentials first. That includes your folio number on the mutual fund website or the platform of the mutual fund aggregator and terminate your SIP. If your SIP is offline, i.e., at a mutual fund branch, you need to approach the branch to cancel the SIP.

There are four types of SIPs available in the market-

  1. The top-up or step-up SIP:
    A step-up SIP, also known as a top-up SIP, allows you to increase the amount of your SIP investment at regular intervals.
  2. Perpetual SIP:
    A perpetual SIP is an investment that lasts indefinitely, with no set duration or end date
  3. Flexible SIP:
    You can alter the amount of your SIP investment with a flexible SIP.
  4. Trigger SIP:
    A trigger SIP is a type of investment that is triggered by specific events that you specify. For example, if the NAV of a scheme falls below a given threshold, you can establish a trigger to double the SIP.

It is recommended that you send the renewal instruction at least 30 working days before the expiration date to ensure a continuous investment. If an existing SIP is about to expire, you can renew it using the same folio number. The SIP will begin in 21-30 days from the date of submission of the form. If the SIP has been implemented on an internet platform, you can send the platform provider the renewal instructions.

Disclaimer : ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents are solely for informational and educational purpose.