FRANKLIN TEMPLETON MUTUAL FUND SIP Calculator

SIP calculator is a metric that allows investors and individuals to estimate the mutual fund returns on the investments made using the SIP (Systematic Investment Plan).

Using the SIP calculator is very easy and convenient to calculate the returns on mutual funds investments. You are required to enter several metrics to find the exact return, such as the investment amount, duration of the investment, frequency of the investment, and the expected returns.

The goal of the SIP calculator is to determine the monthly SIP investments in the mutual funds.

1. Small money can be invested:  Investors can start a SIP even Rs 500 in mutual funds, which is not possible in case you want to invest in shares. Shares of some of the listed companies trade at higher prices, which can't be owned by small investing directly with small amounts.
2. Disciplined investing:  SIP instil discipline into investors by committing to invest a predefined amount at regular intervals which is essential for building wealth in the long-term.
3. No need to worry about market volatility:  Investors receive more units when the NAV of a mutual funds fall and less units when NAV of mutual funds rise. Therefore, over a long period of time the cost of units to investors will be significantly lower despite ups and downs. This phenomenon is called Rupee cost averaging.
4. Flexibility:  Investors have the flexibility to decide the SIP amount, period and interval of SIP as per their convenience.
5. Offers diversification at small investment:  Investors can't diversify their portfolio with small investment surplus. But with mutual funds, they can get a diversified portfolio, even with investment of Rs 500.
6. Professional management of investments:  Mutual funds are managed by knowledgeable and disciplined fund managers. Investors generally don't have in-depth knowledge of investing.
7. Power of compounding:  Investors can stay invested in mutual funds for a longer period of time. Compounding is a phenomenon wherein over a period of time returns get added to corpus and this in return generates more return. This phenomenon leads to an exponential growth of corpus.

Below are the ways you can start SIPs on the INDmoney website.

1. Login
2. Go to Mutual Funds explore page
3. Select a fund.
4. Click on ‘Start SIP’ button

Starting a new SIP in the same fund is the easiest way to increase the SIP amount in the fund. Below are the step to start a new SIP in the existing funds:

1. Login
2. Go to investments
3. Go to my mutual funds
4. Select a fund
5. Click on ‘Invest More’

Redeeming a SIP in the same fund is the very easy on INDmoney. Below are the step to redeem SIP amount in the existing funds:

1. Login
2. Go to investments
3. Go to my mutual funds
4. Select a fund
5. Click on ‘Redeem’

With auto-debit feature, firstly you don’t need to remember the debit dates as the bank account will get debited automatically on the date which you have selected for SIP. However, just in case for whatever reason the funds are not available in the bank account, you will miss one SIP. There is no penalty or any fee. Your SIP account remains active even if you miss one SIP date but after multiple misses, it gets cancelled.

The daily SIP calculator is a very simple to use tool. One can use it by following the steps mentioned below: 

Step1: In the calculator, choose the SIP tab

Step 2: Choose the frequency as Daily

Step 3: Input the Daily SIP amount

Step 4: Choose the expected return

Step 5: Choose the time period

Step 6: Now, you should be able to see: 

1. Total amount invested over this period
2. Future value of your SIP
3. Total gains

The formula used in the Daily SIP calculator to calculate the expected returns is as follows:

FV = P [ (1+i) ^ n-1] * (1+i) / i

FV = Future value or the amount you will receive at the time of maturity of the investment.

P = Principal amount you invested through SIP 

i = Compounded rate of return

r = Expected rate of return

n = Investment duration

The inputs have to be adjusted to reflect the frequency as daily. While r is the return estimate yearly, i = r/365 gives the daily return estimate. Similarly, n is adjusted as 365* the number of years to reflect the number of periods.

The formula used in the Weekly SIP calculator to calculate the expected returns is as follows:

FV = P [ (1+i) ^ n-1] * (1+i) / i

FV = Future value or the amount you will receive at the time of maturity of the investment.

P = Principal amount you invested through SIP 

i = Compounded rate of return

r = Expected rate of return

n = Investment duration

The inputs have to be adjusted to reflect the frequency as weekly While r is the return estimate yearly, i = r/52 gives the weekly return estimate. Similarly, n is adjusted as 52* the number of years to reflect the number of periods.

Daily SIPs are suitable for users who have surplus money and would like to stagger their investments in a better way. It will help the investor to invest small amounts into the market to avoid heavy drawdowns in case of market downturns. Hence, they will ensure that the user faces lower volatility, and generates potentially higher return in the market as compared to users with weekly or monthly SIPs. Hence, Daily SIPs could be an excellent alternative to monthly SIPs. 

Let us look at an example to understand this better. Mr X invests in mutual funds through daily SIPs of Rs 1,000. Mr Y invests Rs 30,000 through monthly SIPs. Assume that the time horizon is one year. Here’s the difference between the two investments. 

FV in case of Mr X: Rs 3.87 lakh

FV in case of Mr Y: Rs 3.80 lakh

Notice that difference in amount for Mr Y. This is because the total amount invested through daily SIPs is Rs 3.65 lakh, while that invested through monthly SIP is Rs 3.60 lakh (30,000*12). An additional investment of Rs 5,000 in the case of Mr X has yielded a higher return.

Weekly SIPs will help the user to average out her cost in a better way, and navigate volatile markets in a smoother manner. It is suitable for users who wish to create long-term wealth in the market by staying invested for longer periods of time and with a higher frequency of investments. The user faces lower volatility, and generates potentially higher return in the market as compared to users with monthly SIPs. Hence, weekly SIPs could be an excellent alternative to monthly SIPs. 

Let us look at an example to understand this better. Mr X invests in mutual funds through weekly SIPs of Rs 5,000. Mr Y invests Rs 20,000 through monthly SIPs. Assume that the time horizon is one year. Here’s the difference between the two investments. 

FV in case of Mr X: Rs 2.75 lakh

FV in case of Mr Y: Rs 2.53 lakh

Notice that difference in amount for Mr X. This is because the total amount invested through weekly SIPs is Rs 2.60 lakh (52 weeks * 5,000), while that invested through monthly SIP is Rs 2.4 lakh (20,000*12). An additional investment of Rs 20,000 in the case of Mr X has yielded a higher return.