SIP Calculator

What is SIP?

A Systematic Investment Plan (SIP) lets an investor put a fixed amount into a mutual fund at regular intervals, typically monthly, instead of investing a lump sum. It spreads purchases across market highs and lows and builds a savings habit over time.

The formula

FV = P × [((1 + r)ⁿ − 1) ÷ r] × (1 + r)

Where P is the monthly investment, r is the monthly rate of return (annual rate ÷ 12 ÷ 100), and n is the total number of monthly installments.

Worked example

Investing 10,000 per month for 10 years at an assumed 12% annual return gives a total invested amount of 12,00,000. Applying the formula, the projected value is roughly 23,23,390 — meaning about 11,23,390 comes from compounded returns rather than your own contributions.

Power of compounding

Compounding means your returns start generating their own returns. The gap between money invested and final value grows faster in later years, which is why staying invested for longer tends to matter more than trying to time the market.

SIP vs lump sum investment

A SIP averages your purchase price across market ups and downs, reducing the impact of investing everything at a single, possibly unfavourable, moment. A lump sum can outperform a SIP if invested just before a sustained rise, but that timing is impossible to predict reliably — which is why SIPs are generally preferred for disciplined, long-term investing.

Method and sources

The projection is the standard future value of a series of equal payments made at the start of each month: each instalment earns that month's return, at a monthly rate of the annual rate ÷ 12. Dividing the annual rate by 12 is a common convention, and it gives a slightly higher result than compounding an effective yearly return of the same figure. The return is assumed to be constant, and no fees, taxes or exit load are deducted; real returns vary. The worked example and several other cases were checked against a month-by-month simulation.

How to use this calculator

Enter the monthly amount you plan to invest, an assumed annual rate of return, and the investment duration in years. The projected return rate is the input that matters most and the hardest to predict — mutual fund returns vary by fund type and market conditions, so try a few different rates (for example, a conservative 8% alongside a more optimistic 12–14%) to see a realistic range of outcomes rather than a single number.

A note on risk and returns

Unlike a fixed deposit, a SIP's projected return is an assumption, not a guarantee — actual mutual fund returns depend on market performance and can be negative in poor years, even though the long-term average may be positive. In India, equity mutual fund gains held over a year are also subject to long-term capital gains (LTCG) tax, which this calculator doesn't factor into the projected value shown.