SIP Calculator
Technical Foundations of Compounding
To evaluate long-term wealth accumulation, we employ the Future Value of an Ordinary Annuity formula. However, unlike standard calculators, our engine integrates Yearly Step-up Logic, reflecting the reality of scaling professional income in high-stakes fields like avionics or hardware engineering.
The Mathematical Core
The standard Future Value ($FV$) without step-up is defined as:
$$FV = P \times \frac{(1 + i)^n – 1}{i} \times (1 + i)$$
- **$P$:** Monthly Contribution amount.
- **$i$:** Periodic interest rate (Annual Rate / 12).
- **$n$:** Total number of compounding periods (Years × 12).
The “Real Rate of Return” and Inflation
In stock market trading, it is vital to distinguish between **Nominal** and **Real** returns. If your portfolio returns 12% but inflation is at 6%, your real purchasing power only grows at approximately 6%. This calculator helps you visualize the massive gap that even a 1% difference in returns can make over a 20-year horizon.
Strategic Advantage of Step-Up SIP
By increasing your monthly SIP by just 10% every year, you effectively “buy time.” This strategy mitigates the impact of market volatility and ensures that your investment portfolio grows in tandem with your professional billables or freelance revenue at **Kinetic Hardware Labs**.