Systematic Investment Plan or SIP is a Mutual Fund investment plan. A general misconception is that Mutual Funds and SIP are the same. However, Systematic Investment Plan is only one of the two investment procedures employed for investing in Mutual Funds; the other being a lump-sum investment.
Through SIP, you can start investing with a minimum of Rs. 500 every month. It allows you the privilege of wealth appreciation over a period with significant market volatility adjustment benefit, unlike lump-sum investment. It is ideal for novice and small scale investors as you can employ only a little portion of your disposable income, thus eliminating any form of financial burden.
You can calculate your estimated returns from SIP investments using the ICICI SIP calculator.
ICICI is currently the third-largest private sector bank in India in terms of market capitalisation. It has been a renowned financial institution in the country over the last two decades and has mustered a substantial reputation for its state-of-the-art banking and other financial services.
The ICICI Bank SIP calculator allows you following benefits –
The following is the formula for calculation of the maturity value from SIP investments –
M = P * [{(1 + i) ^ N – 1} / i] * (i + 1)
In the formula –
The ICICI Prudential SIP calculator integrates this formula mentioned above for calculation.
Example: Mr L decides to invest in 14% ELSS Funds through SIP, with a monthly investment of Rs. 5000. He plans to continue the investment for 10 years.
Therefore, M = 5000 * [{(1 + 0.14) ^ 120 – 1} / 0.14] * (0.14 + 1)
Or, M = Rs. 13,10,000
The total amount invested by Mr L across 10 years was Rs. 6 Lakh and the returns from the same excluding the principal amount stands at Rs. (13,10,000 – 6,00,000), i.e. Rs. 7,10,000.
You can use an ICICI SIP calculator to gauge the returns with different variables, i.e. investment tenure and principal amount, and select the combination which is financially convenient and ideally complements your investment objective.
You can also peruse through other Mutual Funds that offer a higher rate of return. However, MFs with a higher rate of return entails considerably larger risk.
The following table demonstrates the returns Mr L will be earning if he opts for different investment tenures keeping other factors constant.
| Number of Years | Amount Invested (Rs.) | Value on maturity (Rs.) |
| 5 | 3,00,000 | 4,40,000 |
| 8 | 4,80,000 | 8,90,000 |
| 12 | 7,20,000 | 18,70,000 |
| 15 | 9,00,000 | 30,60,000 |
| 18 | 10,80,000 | 48,80,000 |
Mutual Funds reap much higher profits over longer tenure compared to other forms of investment. The scope for aggressive capital appreciation is vast in case of Mutual Funds.
Using the Groww SIP calculator allows you the following benefits –
Mutual Funds are becoming an increasingly popular financial product for wealth accumulation and appreciation. SIP offers flexibility, makes your investment habit more disciplined, and allows rupee-cost averaging benefits. Therefore, it is much more convenient and easy for investors, rookies and veterans alike.