How the SIP calculator works
A SIP (systematic investment plan) puts a fixed amount into a mutual fund every month. Each instalment buys units and then grows along with the fund, so early instalments have the longest time to compound. The calculator uses the standard SIP formula, with each instalment invested at the start of the month:
P = monthly investment · i = expected yearly return ÷ 12 · n = number of months
Worked example
You invest ₹10,000 a month for 10 years and expect 12% a year.
- i = 12% ÷ 12 = 1% = 0.01 and n = 10 × 12 = 120
- (1 + i)^n = 1.01^120 = 3.3004
- FV = 10,000 × (3.3004 − 1) ÷ 0.01 × 1.01 = ₹23,23,391
You put in ₹12,00,000, so the estimated returns are ₹11,23,391. With 6% inflation, that ₹23.2 lakh would buy what about ₹12.97 lakh buys today. Tick Show values in today’s money to see this for your own plan.
Our assumption, and why calculators differ
Dividing the yearly return by 12 is the convention most SIP calculators use, and our default results match them to the rupee. Strictly, though, 1% a month compounds to 12.68% a year, a little more than the 12% you typed. If you want 12% to mean exactly 12% a year (a CAGR, like the lumpsum formula), switch to Exact yearly return, which uses i = (1 + R)^(1/12) − 1. For the example above, that gives ₹22,40,359 instead of ₹23,23,391. Neither is wrong; just compare like with like.
Time matters more than the amount
Here is ₹5,000 a month at an assumed 12% a year:
| Years | Invested | Estimated value | Estimated returns |
|---|---|---|---|
| 5 | ₹3,00,000 | ₹4,12,432 | ₹1,12,432 |
| 10 | ₹6,00,000 | ₹11,61,695 | ₹5,61,695 |
| 15 | ₹9,00,000 | ₹25,22,880 | ₹16,22,880 |
| 20 | ₹12,00,000 | ₹49,95,740 | ₹37,95,740 |
| 25 | ₹15,00,000 | ₹94,88,175 | ₹79,88,175 |
| 30 | ₹18,00,000 | ₹1,76,49,569 | ₹1,58,49,569 |
Doubling the time from 15 to 30 years doubles what you put in but multiplies the estimated value by about seven. Starting early is the single biggest lever you control.
Step-up SIP
A step-up SIP raises your instalment every year, for example by 10% when your salary goes up. Starting at ₹10,000 a month and stepping up 10% a year for 10 years at 12%, you invest ₹19,12,491 and the estimated value is ₹33,74,326, about ₹10.5 lakh more than a flat ₹10,000 SIP. Many fund houses offer this as a “top-up” facility.
SIP vs lumpsum
The Lumpsum tab grows a one-time investment at the yearly rate: FV = A × (1 + R)^t. Investing ₹12 lakh at once for 10 years at 12% gives ₹37,27,018, far more than the same ₹12 lakh spread over a 10-year SIP, because every rupee is invested from the first day. Real markets are not steady, though. A SIP buys more units when prices are low and fewer when they are high, and it protects you from putting everything in just before a fall. If you earn monthly, a SIP is the natural fit; if you receive a large sum, investing it in parts over a few months is a middle path.
Plan for a goal
The Goal planner works backwards from a target. To reach ₹1 crore in 15 years at 12% a year, you need about ₹19,819 a month. Add a step-up and the starting amount falls: with a 10% yearly step-up, ₹50 lakh in 10 years needs a starting SIP of about ₹14,818.
Tips
- Use realistic returns. Equity funds have been volatile; a lower assumption (8% to 10%) gives a safer plan, and debt funds usually return less.
- Remember costs and tax. Expense ratios reduce returns, and gains may be taxed when you redeem. Check your tax position with the India income tax calculator.
- Paying off a loan early can be a guaranteed “return” equal to its interest rate; compare with the EMI calculator.
- For fixed deposits, recurring deposits or savings outside mutual funds, use the compound interest calculator.
These are estimates for planning, not a forecast. Mutual fund investments are subject to market risks, and past returns do not guarantee future results.