Home
Back
Future Value Formula:
| From: | To: |
The UK Index Fund SIP Calculator helps investors estimate the future value of their Systematic Investment Plan (SIP) in UK index funds. It calculates the potential growth of regular monthly investments over time, accounting for compound returns.
The calculator uses the future value of annuity formula:
Where:
Explanation: This formula accounts for compound growth on regular monthly investments, showing how small, consistent investments can grow significantly over time through the power of compounding.
Details: Systematic Investment Plans in UK index funds offer a disciplined approach to investing, pound-cost averaging, and exposure to broad market growth. They are particularly suitable for long-term wealth building and retirement planning.
Tips: Enter your monthly investment amount in GBP, expected annual return rate (typically 5-8% for UK index funds historically), and investment period in years. All values must be positive and realistic.
Q1: What are typical returns for UK index funds?
A: Historically, UK equity index funds have returned 5-8% annually over the long term, though past performance doesn't guarantee future results.
Q2: How does pound-cost averaging work in SIP?
A: By investing fixed amounts regularly, you buy more units when prices are low and fewer when prices are high, averaging out your purchase cost over time.
Q3: Are there tax advantages for UK investors?
A: Yes, investments in ISAs (Individual Savings Accounts) and SIPPs (Self-Invested Personal Pensions) offer tax-efficient growth for UK residents.
Q4: What are the risks of index fund investing?
A: Market risk, inflation risk, and concentration risk. However, index funds provide diversification across many companies, reducing individual stock risk.
Q5: Should I consider inflation in my calculations?
A: The calculator shows nominal returns. For real returns (after inflation), subtract 2-3% from your expected return rate to account for typical UK inflation.