Compound Interest Calculator vs SIP Calculator
Compare lump-sum investing with systematic monthly investments. Learn which approach suits your financial situation and goals.
Compound Interest Calculator
The Compound Interest Calculator shows how a lump-sum investment grows over time with the power of compounding. It demonstrates the exponential growth effect when your returns generate their own returns.
Best For
- Projecting growth of a one-time investment
- Understanding the effect of compounding frequency
- Comparing different interest rates over time
- Educational exploration of exponential growth
Pros
- Clear visualization of exponential growth
- Adjustable compounding frequency (daily, monthly, yearly)
- Shows the dramatic impact of time on wealth
- Great for understanding a core financial concept
Limitations
- Assumes a single initial deposit with no additions
- Uses a fixed rate of return (not realistic for equities)
- Does not account for taxes or inflation by default
SIP Calculator
The SIP (Systematic Investment Plan) Calculator projects the growth of regular, recurring investments made at fixed intervals. It models how consistent monthly contributions build wealth over time through rupee-cost or dollar-cost averaging.
Best For
- Planning regular monthly or quarterly investments
- Building a long-term wealth accumulation strategy
- Understanding dollar-cost averaging benefits
- Setting realistic savings goals for salaried individuals
Pros
- Models real-world investing behavior (regular contributions)
- Shows total invested vs total returns clearly
- Helps set achievable monthly savings targets
- Accounts for the discipline of regular investing
Limitations
- Assumes a constant rate of return each period
- Does not model market volatility or sequence risk
- Fixed contribution amount (no step-up option)
Feature-by-Feature Comparison
| Feature | Compound Interest Calculator | SIP Calculator |
|---|---|---|
| Investment Style | Lump-sum (one-time) | Recurring (monthly/quarterly) |
| Best For | Windfall, inheritance, bonus | Salary-based regular savings |
| Compounding Visualization | Exponential growth curve | Steady accumulation curve |
| Initial Capital Required | Full amount upfront | Small amounts over time |
| Risk Consideration | Market timing risk (all-in at once) | Dollar-cost averaging reduces timing risk |
| Typical Use Case | Fixed deposits, bonds, savings accounts | Mutual funds, index funds, retirement accounts |
| Output | Future value of initial investment | Future value of all contributions combined |
| Flexibility | Adjustable compounding frequency | Adjustable contribution interval |
When to Use Each Tool
Use the Compound Interest Calculator when you have a lump sum to invest and want to see how it will grow. This is ideal for windfalls, bonuses, inheritance, or evaluating fixed deposits and savings accounts. Use the SIP Calculator when you plan to invest a fixed amount regularly from your income. This is the right tool for planning mutual fund SIPs, 401(k) contributions, or any regular savings plan. If you plan to combine both approaches, run each calculator separately and add the results.
Our Recommendation
Most people benefit more from the SIP Calculator because regular investing aligns with how most people earn and save. However, if you receive a large sum and want to understand its growth potential, the Compound Interest Calculator is essential. Ideally, use both: the SIP Calculator for your ongoing contributions and the Compound Interest Calculator for any lump sums you invest along the way.