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SIP calculator – Calculate your savings with Direct Mutual Funds

SIP investing has become very popular and most SIPs are held for relatively long periods of time like 15-20 years

Over these long horizons, the choice between Regular and Direct Plans can really make a massive difference.
With some reasonable assumptions, after Year 10 an investor would have paid out more from your SIP in commissions, then what you are actually putting in!

To see how the difference in expense ratio between Regular Plans and Direct Plans translates into actual rupees in the case of SIPs consider the following example. This example has a few reasonable assumptions, but we later discuss how changing these assumptions would affect the results

Assumptions:

1. It is a monthly SIP i.e. where new investments are made every month;
2. Amount invested per month: 20,000;
3. Pre-cost returns of the fund: 10%;
4. Regular plan expense ratio: 2%;
5. Direct plan expense ratio: 1%.
6. So post-cost returns of the fund will be 8% and 9% for the Regular and Direct plans respectively. Also, we will assume that returns are
7. uniformly distributed in the year, so
8. Regular Plan returns are 8%/12 = 0.67% every month
9. Direct Plan returns are 9%/12 = 0.75% every month.

 

Table 1: SIP returns under direct and regular plans (20 years):

Year	Month Number	Investment amount in Regular Plan	Investment amount in Direct Plan	Extra returns with Direct Plan (Rs)	Extra returns as a % of annual investment (2.4 lakhs)
Year1	Month1	20,000	20,000	–	–
.	Month2	20,000*(1+0.67%) + 20,000 = 40,133	20,000*(1+0.75%) + 20,000 = 40,150	17	–
.	Month3	40,133*(1+0.67%) + 20,000 = 60,401	40,150*(1+0.75%) + 20,000 = 60,451	50	–
.	Month4	80,804	101	–	–
.	Month5	1,01,342	1,01,511	169	–
.	Month6	1,22,018	1,22,273	255	–
.	Month 7	1,42,831	1,43,190	358
.	Month 8	1,63,784	1,64,264	480
.	Month 9	1,84,875	1,85,496	620
.	Month 10	2,06,108	2,06,887	779
.	Month 11	2,27,482	2,28,438	956
.	Month 12	2,48,999	2,50,152	1,153	0%
Year 2	Month 24	5,18,664	5,23,769	5,106	2%
Year 3	Month 36	8,10,711	8,23,054	12,343	5%
Year 4	Month 48	11,26,998	11,50,414	23,416	10%
Year 5	Month 60	14,69,537	15,08,483	38,946	16%
Year 6	Month 72	18,40,507	19,00,141	59,634	25%
Year 7	Month 84	22,42,266	23,28,539	86,272	36%
Year 8	Month 96	26,77,372	27,97,123	1,19,752	50%
Year 9	Month 108	31,48,591	33,09,664	1,61,074	67%
Year 10	Month 120	36,58,921	38,70,286	2,11,365	88%
Year 11	Month 132	42,11,608	44,83,497	2,71,889	113%
Year 12	Month 144	48,10,168	51,54,231	3,44,064	143%
Year 13	Month 156	54,58,408	58,87,886	4,29,478	179%
Year 14	Month 168	61,60,451	66,90,362	5,29,910	221%
Year 15	Month 180	69,20,764	75,68,115	6,47,351	270%
Year 16	Month 192	77,44,183	85,28,209	7,84,026	327%
Year 17	Month 204	86,35,945	95,78,365	9,42,420	393%
Year 18	Month 216	96,01,723	1,07,27,033	11,25,311	469%
Year 19	Month 228	1,06,47,659	1,19,83,455	13,35,796	557%
Year 20	Month 240	1,17,80,408	1,33,57,737	15,77,329	657%

 

Year	Month Number	Investment amount in Regular Plan	Investment amount in Direct Plan	Extra returns with Direct Plan (Rs)	Extra returns as a % of annual investment (2.4 lakhs)
Year 1	Month 1	20,000	20,000	–
.	Month 2	= 20,000*(1+0.67%) + 20,000 = 40,133	= 20,000*(1+0.75%) + 20,000 = 40,150	17
.	Month 3	= 40,133*(1+0.67%) + 20,000 = 60,401	= 40,150*(1+0.75%) + 20,000 = 60,451	50
.	Month 4	80,804	80,905	101
.	Month 5	1,01,342	1,01,511	169
.	Month 6	1,22,018	1,22,273	255
.	Month 7	1,42,831	1,43,190	358
.	Month 8	1,63,784	1,64,264	480
.	Month 9	1,84,875	1,85,496	620
.	Month 10	2,06,108	2,06,887	779
.	Month 11	2,27,482	2,28,438	956
.	Month 12	2,48,999	2,50,152	1,153	0%
Year 2	Month 24	5,18,664	5,23,769	5,106	2%
Year 3	Month 36	8,10,711	8,23,054	12,343	5%
Year 4	Month 48	11,26,998	11,50,414	23,416	10%
Year 5	Month 60	14,69,537	15,08,483	38,946	16%
Year 6	Month 72	18,40,507	19,00,141	59,634	25%
Year 7	Month 84	22,42,266	23,28,539	86,272	36%
Year 8	Month 96	26,77,372	27,97,123	1,19,752	50%
Year 9	Month 108	31,48,591	33,09,664	1,61,074	67%
Year 10	Month 120	36,58,921	38,70,286	2,11,365	88%
Year 11	Month 132	42,11,608	44,83,497	2,71,889	113%
Year 12	Month 144	48,10,168	51,54,231	3,44,064	143%
Year 13	Month 156	54,58,408	58,87,886	4,29,478	179%
Year 14	Month 168	61,60,451	66,90,362	5,29,910	221%
Year 15	Month 180	69,20,764	75,68,115	6,47,351	270%
Year 16	Month 192	77,44,183	85,28,209	7,84,026	327%
Year 17	Month 204	86,35,945	95,78,365	9,42,420	393%
Year 18	Month 216	96,01,723	1,07,27,033	11,25,311	469%
Year 19	Month 228	1,06,47,659	1,19,83,455	13,35,796	557%
Year 20	Month 240	1,17,80,408	1,33,57,737	15,77,329	657%

Source: Orowealth

As you can see the extra returns that you make with Direct Plans keeps increasing over the years, because the extra costs of Regular Plans is applied over the total investment corpus. In fact from Year 11 onwards you are losing more money from your SIP on account of being in the Regular Plan than you are actually putting in every year!

How will these numbers change with assumptions?

1. Investment amount per month: If you are investing more per month, then you will also lose more in rupee terms on account of being in the Regular Plan. However, the percentage numbers will remain constant.

2. Pre-cost returns of the fund: We have taken a very conservative number of 10% here. If your assumption on pre-cost returns is higher, then the gap between Regular and Direct plans will increase further. This is because if investments can earn higher returns, then the fact that your agent is taking away a part of your investment amount will also hurt more.

3. The difference in Direct and Regular expense ratio: Rupee figures will increase/decrease if this gap is higher/lower. You can see the actual difference for different funds using the interactive graphic on our homepage: www.lpl电竞官方观看正规.com

Created by Orowealth.com