How a SIP calculator can help investors assess the impact of selling investments to fund an IPO

With multiple initial public offerings (IPOs) expected to come to the market, investors may consider selling existing investments to fund a subscription. However, selling investments to fund an IPO could affect long-term financial goals, especially when the money comes from investments held for wealth creation.

Systematic investment plans (SIPs) enable investors to build a mutual fund corpus through regular contributions, and a SIP calculator can provide an estimate of how changes in regular contributions may affect the projected value of an investment. This can help investors estimate the potential consequences of reducing their SIP contributions to fund an IPO.

How a SIP calculator helps you understand the consequences of selling investments

A SIP calculator helps estimate the potential value of an investment corpus based on regular monthly contributions, a given period, and an assumed rate of return. Investors can use a SIP calculator to compare the expected corpus over different investment periods or with different contribution amounts.


For example, the projected corpus values for a SIP of ₹5,000 per month could be compared for investment periods of five and ten years. Similarly, if investors decide to reduce or stop their SIP contributions to fund an IPO, the calculator could help estimate the potential impact on their projected corpus.

Therefore, investors can compare the expected corpus under different contribution scenarios against their financial goals. However, the results should be used in conjunction with informed assessments of the investment purpose and risks, since actual returns are not guaranteed and may differ from the assumed rate. Although the calculated corpus can reflect the impact of reducing or stopping SIP contributions, it cannot determine which investment to sell or whether an IPO is worth applying for.

How to decide what to sell to fund an upcoming IPO

The decision process involves careful evaluation of the available funds as well as the impact of selling on long-term financial goals.

You can start by assessing your available funds

Consider regular expenses, loan repayments, emergency savings, and upcoming financial commitments before deciding how much money is available for an IPO application. This helps establish whether the subscription amount can be arranged without using funds required for essential expenses.

Review the purpose of your investments

After estimating the potential investments that you may sell to raise funds, it becomes critical to compare the purpose, value and time horizon of different types of investments. Investments should be evaluated in relation to their purpose and time frames since selling investments earmarked to meet specific financial goals could jeopardise those goals if the proceeds are used to fund an IPO subscription.

Therefore, it is essential to ensure that regular SIP contributions towards long-term goals are not disrupted unnecessarily.

Calculate the impact on your long-term goals

A SIP calculator can be used to estimate the potential impact of reducing regular contributions or changing the investment period on long-term goals. However, if you sell an existing investment without changing your regular SIP contributions, a SIP calculator will not reflect the direct impact of selling those holdings on your portfolio. Likewise, investors should take into consideration any capital gains tax, exit load, or brokerage charges associated with selling an investment, where applicable. The benefits of selling an investment should be weighed against the costs involved.

Consider the details of the IPO offering

Before deciding to sell anything to fund an IPO subscription, investors should first consider the terms of an IPO, including its underlying business, fundamentals and valuations. Applying for an IPO does not guarantee a profit. The shares could also trade below their issue price on the stock exchanges. Therefore, it is essential to review information about an IPO and compare the opportunity with one's financial needs, risk tolerance, and the costs involved. The decision to apply for an upcoming IPO subscription should be assessed separately from the decision to sell any investment.

Planning IPO investments without compromising long-term goals

Since selling investments to fund an IPO subscription could interfere with long-term goals, investors need to assess the funds available and consider the purpose of each investment before making a decision. Estimating how changes in regular SIP contributions affect the projected corpus can help investors understand the potential implications for their long-term plans. Meanwhile, platforms such as 5paisa provide a SIP calculator as well as information on upcoming IPOs, enabling investors to consider IPO opportunities in relation to their long-term investment plans.

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