Explained: Want to calculate the future value of your Rs 10,000 SIP? Here’s the formula

Mutual fund investors often set aside a fixed amount each month for investments through a systematic investment plan (SIP), after meeting their regular expenses and setting aside money for emergencies. Suppose an investor starts a monthly SIP of Rs 10,000 for five years. They may want to know how much this investment could grow to by the end of the period.

Investors can use the future value formula to estimate the potential value of their SIP investments over a given period. The formula provides an indicative estimate of how much their regular monthly investments could accumulate, based on an assumed rate of return.

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

In this formula:

FV = Future value or the amount you get at maturity.

P = Amount you invest through SIP
i = Compounded rate of returnn = Investment duration in months

Example: A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 10%.

The future value of this investment will be Rs 20.48 lakh after 10 years.

Example: A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 12%.

The future value of this investment will be Rs 23 lakh after 10 years.

Example: A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 15%.

The future value of this investment will be Rs 27.52 lakh after 10 years.

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