What is SIP - Systematic Investment Plan
Systematic Investment Plan (SIP) is one of the most popular ways to invest in mutual funds. Whether you're a seasoned investor or a beginner, an SIP calculator helps you plan your financial journey by estimating your future returns.
Axis Bank SIP Calculator
The Axis SIP Calculator is a powerful tool provided by Axis Bank to help investors estimate the
future value of their Systematic Investment Plan (SIP). Axis Bank, one of India’s leading private
sector banks, offers this calculator to assist investors in planning their investments in mutual
funds systematically.
By investing a fixed sum regularly through an SIP, investors benefit from compounding and rupee cost
averaging, which can lead to significant returns over the long term.
The Axis SIP Calculator allows you to enter your monthly SIP amount, the expected rate of return,
and the investment duration to calculate the estimated value of your SIP after the investment
period.
Formula Used in Axis Bank SIP Calculator
The formula to calculate the future value of an Axis Bank SIP investment is:
The formula for SIP is: \( FV = P \times \left[ \frac{(1 + \frac{r}{n})^{nt} - 1}{\frac{r}{n}} \right] \times (1 + \frac{r}{n}) \)
Where:\( FV\) = Future Value
\( P\) = Monthly SIP investment
\( r\) = Annual rate of return in decimals (as a decimal, e.g., 12% = 0.12)
\( n\) = Number of compounding periods per year (Usually 12 for monthly SIPs)
\( t\) = Investment tenure in years
Example of Axis Bank SIP Calculation
Let's understand how to calculate Axis Bank SIP returns using an example:
- \(P = 5,000\) (monthly investment)
- \(r = 12\%\) annual interest rate (\(0.12\) as a decimal)
- \(n = 12\) (monthly compounding periods per year)
- \(t = 10\) years
Now, let's substituting these values into the formula:
\( FV = 5000 \times \left[ \frac{(1 + \frac{0.12}{12})^{12 \times 10} - 1}{\frac{0.12}{12}} \right] \times (1 + \frac{0.12}{12}) \)
Step-by-step calculation:
- Monthly interest rate: \( \frac{r}{n} = \frac{0.12}{12} = 0.01 \) (or 1%)
- Total compounding periods: \( nt = 12 \times 10 = 120 \)
- \( (1 + 0.01)^{120} = (1.01)^{120} \approx 3.30039 \)
- \( \frac{(3.30039 - 1)}{0.01} = \frac{2.30039}{0.01} = 230.039 \)
- \( FV = 5000 \times 230.039 \times 1.01 = 5000 \times 232.339 = 1,161,695 \)
Therefore, the future value (FV) of your SIP investment is approximately:
\( FV \approx \text{₹}1,161,695 \)
How to Use an Axis Bank SIP Calculator?
Using an online SIP calculator is straightforward:
- Enter Monthly SIP Amount: Enter the fixed amount you plan to invest monthly.
- Provide Expected Annual Return Rate: Enter the estimated return percentage (e.g., 12%).
- Enter Investment Tenure: Specify the number of years you plan to invest.
- View Results: The calculator will instantly display the Total Investment, Wealth Gained, and Future Value.
Why Use an Axis Bank SIP Calculator for Mutual Fund Investments?
SIP investments rely on the power of compounding and rupee cost averaging, making them ideal for long-term wealth creation. An SIP calculator helps you understand the impact of these benefits by giving you accurate projections.
