Sip Calculator With Yearly Increase

Future Value Formula:

\[ FV = P \times (1 + \frac{Rate}{100})^n + Yearly Increment \times \left(\frac{(1 + \frac{Rate}{100})^n - 1}{\frac{Rate}{100}}\right) \]

Initial Investment (P):

Yearly Increment:

Annual Rate:

Investment Period:

years

Future Value (FV):

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1. What is SIP with Yearly Increase?

This calculator helps estimate the future value of a Systematic Investment Plan (SIP) where you increase your investment amount each year. It accounts for both compound growth of your initial investment and the increasing contributions you make over time.

2. How Does the Calculator Work?

The calculator uses the following formula:

\[ FV = P \times (1 + \frac{Rate}{100})^n + Yearly Increment \times \left(\frac{(1 + \frac{Rate}{100})^n - 1}{\frac{Rate}{100}}\right) \]

Where:

\( P \) — Initial investment amount
\( Yearly Increment \) — Additional amount invested each year
\( Rate \) — Annual rate of return (in percentage)
\( n \) — Investment period in years

Explanation: The formula calculates two components - the growth of your initial investment and the growth of your increasing yearly contributions, then sums them for the total future value.

3. Importance of SIP Calculation

Details: Understanding how your investments grow with regular increases helps in financial planning, retirement savings, and achieving long-term financial goals. It demonstrates the power of compounding with increasing contributions.

4. Using the Calculator

Tips: Enter your initial investment amount, how much you plan to increase your investment each year, expected annual return rate, and investment period. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the benefit of increasing SIP yearly?
A: Yearly increases help combat inflation and allow you to invest more as your income grows, potentially significantly increasing your final corpus.

Q2: How does this differ from regular SIP?
A: Regular SIP assumes fixed periodic investments, while this accounts for increasing your investment amount each year.

Q3: What's a realistic rate of return to assume?
A: For equity investments, 10-12% long-term; for debt instruments, 6-8%. Conservative estimates are better for planning.

Q4: Can I decrease my investment instead?
A: This calculator assumes increases. For decreasing investments, you would need a different formula.

Q5: How accurate are these projections?
A: They're mathematical projections assuming consistent returns. Actual returns will vary year to year.