How the SIP calculator works
A Systematic Investment Plan (SIP) lets you invest a fixed amount in a mutual fund every month. Each instalment buys units and then grows with the fund's returns, so money invested early has more time to compound. This SIP calculator assumes you invest at the start of every month and that the fund earns a steady yearly return, which it converts into a monthly rate. It then adds up how much each instalment grows to by the end of the period.
The SIP formula in plain words
Future value = P × [((1 + i)n − 1) ÷ i] × (1 + i)
P is your monthly SIP amount, i is the monthly rate of return (yearly return ÷ 12 ÷ 100) and n is the total number of monthly instalments. The final "× (1 + i)" is there because each instalment is invested at the start of the month and earns that month's return too.
If you add an annual step-up, the calculator raises your monthly SIP by that percentage at the start of each new year and works month by month instead of using the single formula.
Worked example
You invest ₹10,000 a month for 10 years and expect 12% a year.
- Total invested: ₹12,00,000
- Estimated value after 10 years: ₹23,23,391
- Estimated returns: ₹11,23,391
Keep going for 20 years and the same SIP could reach about ₹99.9 lakh, because compounding works hardest in the later years. With a 10% yearly step-up, the 10-year value rises to about ₹33.7 lakh.
Tips for SIP investors
- Start early and stay invested. Time in the market matters more than the exact amount.
- Use a realistic return. Equity funds have historically been volatile; plan with a conservative estimate rather than the best recent year.
- Step up your SIP whenever your income rises. Even 5–10% a year makes a large difference.
- Do not stop SIPs in a falling market. Lower prices buy more units, which helps long-term returns.
- Remember costs and taxes. Expense ratios and capital gains tax reduce what you actually take home.
Mutual fund returns are not guaranteed. Treat these figures as an estimate to plan with, not a promise.
Frequently asked questions
What is a SIP?
A Systematic Investment Plan (SIP) is a way of investing a fixed amount in a mutual fund at regular intervals, usually monthly. It builds discipline and averages out your purchase price over time.
How does the SIP calculator estimate returns?
It uses the future value of a series of monthly payments made at the start of each month: FV = P × [((1 + i)^n − 1) ÷ i] × (1 + i), with i the monthly return and n the number of months. With a step-up it calculates month by month.
Are SIP returns guaranteed?
No. Mutual fund returns depend on market performance and can be higher or lower than the rate you enter, including negative in some years. The calculator shows an estimate based on a constant rate.
What return should I assume?
Many people plan with 10–12% a year for diversified equity funds over long periods and 6–8% for debt funds, but past returns do not guarantee future results. Try a few rates to see a range of outcomes.
What is a SIP step-up?
A step-up (or top-up) SIP increases your monthly investment by a fixed percentage every year, usually in line with salary increases. Enter a step-up percentage to see its effect.
Is SIP better than a lumpsum investment?
Neither is always better. A lumpsum can earn more if markets rise steadily, while a SIP spreads risk over time and suits regular income. Compare both with our Lumpsum Calculator.