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Are you doing the right maths using mutual fund SIP calculator

Mutual fund Systematic Investment Plans (SIPs) are among the best savings and investment options for retail investors. By investing a portion of your monthly savings in a disciplined way, you can meet a variety of long term financial goals through the power of compounding. In order for your long term investment planning to be effective, investors should clearly define different financial goals in quantifiable terms. If your goal is clearly defined, a mutual fund SIP calculator can help you estimate how much you need to save every month (or any other frequency) in order to meet your future financial goals.


But before we proceed, let us examine what are the advantages of Mutual Fund SIP investments


There are many mutual fund SIP calculators available online which are very easy to use. The same can also be built in excel using the PMT formula. You can use the following online Mutual Fund SIP Calculators –


SIP Calculator


SIP Calculator with step up


SIP Calculator with annual increase


Let us now discuss some important parameters of any mutual fund SIP calculator:-


  • What is your goal amount: Whether it is retirement planning or children’s education or marriage, you should have a number in your mind with regards to how much money you will need in future for meeting these specific goals. This number should not be a whimsical number and it should depend on your family’s lifestyle, aspirations, long term financial needs etc. For example, if you want your daughter to study in a Medical or Engineering or Management College, you should enquire how much these educations might cost. Once you know the current cost of these, it is also very important that you factor in the inflation to arrive at the goal amount.Remember, education and healthcare is among the most inflationary items in the urban consumption basket in India.

    What could be your goal amount by factoring in the inflation? Try this Target Amount SIP Calculator

  • What is the goal timeline: Goal timeline is the number of years left to achieve the goal for which you want to save. For example, if your age is 40 and you plan to retire when you are at age 60, then your goal timeline will be 20 years. Therefore, the goal time-line, i.e. 20 years should be your SIP tenure. In some SIP calculators, goal timeline or tenure can be entered in month or in years, whereas in some calculators (including excel SIP calculator using the PMT formula) the timeline will have to be entered in months, in order to get the required monthly SIP amount.

    You can plan your goal based SIPs using this Goal Setting SIP Calculator

  • What is your return expectation: The next important parameter in SIP calculator is the return expectation. The return expectation is determined by your investment strategy which should be based on your goal timeline (investment tenure) and risk taking appetite. SIPs are suitable for long term and medium term tenures. If your investment tenure is long term, then you can have an aggressive investment strategy (e.g. equity funds); if your investment tenure is medium term, then your investment strategy should be balanced(e.g. hybrid funds). However, your investment strategy should also depend on risk appetite.

    Please read more on thiswhich are the best mutual funds to invest based on your risk profile

    You should ensure that your returns expectations are aligned with the tenure of investment, which you entered in the SIP calculator. For example, if the tenure of your investments is in months (e.g. 240 months instead of 20 years), then annualized returns expectations should be converted to monthly returns expectations (e.g. if your annual return expectation is 15%, you should convert it to monthly return expectation of 1.25%).

    Your return expectation should be based on the long term average returns of the respective mutual funds categories or any other asset class that you are investing in.

    Let us now see the SIP return of various category of mutual funds

  • What if you cannot afford the SIP amount to reach the future goal – It is possible that even though you have planned your goals well you do not have the desired monthly surplus to invest for the SIP. But you need not loose heart as you can still start your SIP and reach the target corpus.

    But how? You can start the SIP investment now with whatever surplus you have every month and then increase the SIP amount annually by a certain percentage. You can try this goal based top up SIP Calculator to arrive at the right annual increase percentage amount of your SIPs.

Using Excel PMT formula to calculate SIP amounts


If you are familiar with Microsoft Excel, you can use the PMT formula to easily calculate the monthly SIP amounts. The PMT formula has four arguments or parameters


=PMT(Rate, NPER, PV, [FV], [Type])


  • Rate – Enter your return expectations. Annual returns should be converted to monthly returns (divide by 12)

  • NPER – Enter your goal timeline / investment tenure (in months)

  • PV – The current value of your investment. If you starting a new SIP, this should be zero

  • [FV] – Enter your final goal amount

  • [Type] – Enter 0 if the SIP date will be at the end of the month or 1 if the SIP date is at the beginning of the month.

Once you enter all the parameters and press enter, Excel will calculate the SIP amount for you. The amount will be shown as negative (ignore the negative sign; it simply means that, these are cash outflows for you).


We discussed how to do the right maths using the mutual fund SIP calculators. It is very important to use intelligent assumptions like inflation, expected rate of return and the amount you can invest through SIPs now etc. That is how the mutual fund SIP calculator will help you know the right SIP amount. We are sure, if you invest the right amount in a disciplined way for the long term, you will be able to achieve your long term financial goals.

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