SIP Calculator

What Is a SIP?

A Systematic Investment Plan (SIP) is a method of investing in mutual funds where you invest a fixed amount at regular intervals — typically monthly — rather than investing a lump sum all at once.

Think of it like a recurring deposit, but instead of a fixed bank interest rate, your money goes into a mutual fund that invests in equities, debt, or a mix. The returns aren't guaranteed, but historically, equity mutual funds have significantly outperformed standard savings accounts over long periods.

SIPs are popular in India and South/Southeast Asia, where mutual fund investing has been made accessible through simple monthly auto-debit systems. But the underlying concept applies to any regular investment in any market globally.

How SIP Returns Work: The Power of Compounding

The math behind SIP growth involves compound interest on periodic contributions. Unlike a one-time investment, each monthly instalment has a different time horizon — the first month's payment compounds for the entire duration, the last month's payment barely compounds at all.

The formula for SIP return:

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

Where:
FV = Future Value
P  = Monthly investment amount
r  = Monthly rate of return (annual rate ÷ 12)
n  = Number of months

Example:

• Monthly SIP: ₹5,000
• Expected annual return: 12%
• Duration: 10 years (120 months)

Monthly rate r = 12% ÷ 12 = 1% = 0.01
FV = 5000 × [((1.01)^120 − 1) ÷ 0.01] × 1.01
FV ≈ ₹11,61,695

Total invested: ₹5,000 × 120 = ₹6,00,000 Returns generated: ₹5,61,695 Wealth created through compounding: ₹5.6 lakh on a ₹6 lakh investment

What Return Rate Should You Use?

Expected return rates for different fund categories (based on long-term Indian market historical data):

Important: These are historical averages, not guarantees. Markets go through periods of poor performance. The longer your investment horizon, the more these averages tend to hold. For goals shorter than 5 years, equity funds carry significant risk of underperformance.

For calculation purposes, most financial planners use **12% for equi...