Tata SIP Calculator
Tata SIP calculator is a simple tool that allows individuals to get an idea of the returns that their mutual fund investments made via SIP could earn. The calculator is designed to provide an estimate of the mutual fund investments made by investors. The calculator will calculate the wealth gain and expected returns for your monthly SIP investment. It is important to note that the actual returns offered by a mutual fund scheme might vary depending on several factors.
Many investors think that SIPs and mutual funds are the same. However, SIPs are merely a mode of investing in mutual funds. SIPs help investors make periodic investments, such as every week, month, or quarter. This helps investors become disciplined in their investment journey.
How Does Our TATA SIP Calculator Work?
The TATA SIP calculator works based on the below formula:
where:
FV is the future value of your investment
P is the monthly investment amount
r is the monthly rate of return, which is the assumed annual return divided by 12
n is the total number of months or the investment duration
Each month’s instalment is counted at the start of the month, which is why the formula ends with × (1 + r).
Example
You are making a monthly SIP payment of ₹10,000 for 15 years. You expect an annual rate of return of 8%. Here's how the calculation will work.
Firstly, convert the annual rate of return to a monthly rate: r = 0.08/12 = 0.00667
Secondly, calculating the total number of months: n = 15 x 12 = 180
When we put these values into the formula:
FV = 10,000 × [((1 + 0.08/12)^180 − 1) ÷ (0.08/12)] × (1 + 0.08/12)
FV = 10,000 × 348.3451
FV = ₹34,83,451 (approximately)
How Should You Use The TATA SIP Calculator?
The TATA SIP calculator can be used to estimate how much wealth you could build when you invest a certain amount of money periodically. Below are the instructions on how to use the TATA SIP calculator.
- You need to enter the amount you want to invest in the scheme
- Then, you should type in the rate of return you expect to earn from your investment
- You need to enter the number of years you will stay invested in the scheme
When you have entered all the above values into the SIP calculator, it will tell you the total amount you have invested and give you an estimated value of the returns.
Example
Mr. David wants to invest ₹3000 every month for 10 years. He expects an annual rate of return of 12%.
By using the SIP calculator formula, here's how you can calculate the future value (FV) of your investments:
Converting the annual rate of return to a monthly rate: r = 0.12/12 = 0.01
Calculating the total number of months: n = 10 x 12 = 120
FV = 3,000 × [((1 + 0.12/12)^120 − 1) ÷ (0.12/12)] × (1 + 0.12/12)
FV = 3,000 × 232.339
FV = ₹6,97,017 (approximately)
Benefits Of Using TATA SIP Calculator
Using a SIP calculator comes with a lot of benefits. Below are some of them.
- The SIP calculator helps you determine the amount you want to invest in through SIPs
- The calculator is simple to use and helps you determine the SIP performance of TATA mutual fund schemes
- It saves you a lot of time and does the maths for you