A SIP Calculator is an online financial utility that enables investors to calculate the potential future value of their Systematic Investment Plan (SIP) investments. It eliminates manual calculation errors by using the compound interest formula. For investors on IPO Baba, this tool is essential for mapping out financial goals—such as retirement planning or buying a house—by showing exactly how small, regular monthly contributions can grow into a large corpus over time.

The SIP calculator uses the annuity formula: $$FV = P \times \frac{(1+i)^n - 1}{i} \times (1+i)$$.
Where P is the monthly investment amount, n is the number of payments (months), and i is the periodic interest rate.
Example: If you invest ₹5,000 monthly for 10 years at 12% returns, the calculator applies this formula 120 times (120 months) to show a total estimated corpus of approximately ₹11.6 Lakhs, whereas your total invested amount is only ₹6 Lakhs.

The Power of Compounding is often called the "eighth wonder of the world" in finance. In a SIP, you earn returns not just on your principal (invested amount), but also on the returns generated by that principal. Over long periods (10+ years), the interest earned starts generating its own interest, causing your wealth to grow exponentially rather than linearly. This is why starting early is more important than investing a large amount.

Standard SIP calculators show the Nominal Value of your future corpus. However, inflation reduces the purchasing power of money over time. To get a realistic picture, you should deduct the inflation rate from your expected return rate. For example, if you expect a 12% return and inflation is 6%, your Real Rate of Return is approximately 6%. Always plan for a higher corpus to account for rising living costs.

Yes, mutual fund returns are taxable. For Equity Mutual Funds:
1. STCG (Short Term Capital Gains): If redeemed within 1 year, returns are taxed at 20%.
2. LTCG (Long Term Capital Gains): If redeemed after 1 year, gains above ₹1.25 Lakh in a financial year are taxed at 12.5%.
Note: Tax rules change per government budget updates; always check the latest finance acts.

While both SIP and RD involve regular monthly savings, SIP in Equity Mutual Funds historically offers much higher returns (12-15%) compared to RDs (6-7%). RDs offer guaranteed returns and safety, while SIPs are market-linked and carry risk. However, for long-term wealth creation (over 5 years), SIP is mathematically superior due to its ability to beat inflation, whereas post-tax RD returns often fall below inflation.

Rupee Cost Averaging is the automatic benefit of SIPs. Since you invest a fixed amount regularly, you buy more units when the market is low (NAV is down) and fewer units when the market is high (NAV is up). This lowers your average cost of acquisition per unit over time, protecting your portfolio from short-term market volatility and removing the need to time the market.

Yes, this is known as a Step-up SIP or Top-up SIP. It is a strategy where you increase your SIP amount by a fixed percentage (e.g., 10%) or amount every year in line with your salary hike. A Step-up SIP can drastically reduce the time needed to reach your financial goals compared to a static SIP amount.

One of the biggest advantages of SIPs is affordability. You can start a SIP in most Indian mutual funds with as little as ₹500 per month. Some funds even allow investments starting at ₹100. This makes mutual funds accessible to students and early-career professionals.

Mutual fund houses generally do not charge a penalty for missing a SIP installment. However, your bank might charge a "ECS/NACH bounce charge" if you do not have sufficient balance in your account on the SIP date. If you miss 3 consecutive installments, the fund house may cancel your SIP registration (though your existing money remains invested).