Formula Used:
SIP: FV = P × {[(1 + r)n - 1] / r} × (1 + r)
where P = Monthly Investment, r = Monthly Rate, n = Number of Months
⚠️ Disclaimer
Mutual fund investments are subject to market risks. Past performance is not indicative of future returns.
Please read all scheme-related documents carefully before investing. The calculations shown are estimates
based on the expected rate of return and actual returns may vary.
How SIP Calculator Works — Complete Guide
How SIP Compounding Works
A Systematic Investment Plan invests a fixed amount every month into a mutual fund. Each monthly instalment earns returns not just on the principal but also on previously accumulated gains. Over long periods, this compounding effect means even modest monthly investments like ₹5,000 can grow to over ₹1 crore in 25 years at 12% annual returns.
Rupee Cost Averaging Explained
When markets fall, your fixed SIP amount buys more units. When markets rise, it buys fewer units. Over time, this averages out your purchase cost and reduces the impact of market volatility. Rupee cost averaging means you do not need to time the market — consistency matters more than entry timing.
Step-Up SIP Benefits
A step-up or top-up SIP increases your monthly contribution by a fixed percentage each year, typically 10-15%. This mirrors salary growth and dramatically accelerates wealth creation. A ₹10,000 SIP with 10% annual step-up can accumulate nearly 2x the corpus of a flat SIP over 20 years at similar returns.
SIP vs Lumpsum Comparison
Lumpsum investing works better in consistently rising markets, while SIP wins during volatile or falling markets due to rupee cost averaging. For most salaried investors, SIP is practical because income arrives monthly. However, if you receive a bonus or inheritance, deploying it as a lumpsum during a market correction can yield higher returns than spreading it via SIP.
Choosing the Right SIP Duration
Equity SIPs should run for at least 7-10 years to ride out market cycles and benefit from compounding. For goals under 3 years, debt fund SIPs are safer. Match your SIP duration to your goal — retirement might need 25+ years while a car down payment might need just 3-4 years. Longer durations also reduce the probability of negative returns significantly.
Frequently Asked Questions
How does a SIP calculator work?
A SIP calculator uses the compound interest formula to estimate the future value of regular monthly investments. It factors in your monthly amount, expected annual return rate, and investment duration to project your total corpus.
What is a good SIP amount to invest monthly?
A common guideline is to invest 20-30% of your monthly income in SIPs. For a goal of ₹1 crore in 15 years at 12% returns, you'd need approximately ₹20,000/month.
What is step-up SIP?
Step-up SIP means increasing your monthly investment by a fixed percentage every year (typically 10-15%). This accelerates wealth creation significantly — a ₹10,000 SIP with 10% annual step-up can grow 40% more than a flat SIP over 20 years.
Are SIP returns guaranteed?
No. SIP returns depend on market performance. However, SIPs benefit from rupee cost averaging, which reduces the impact of market volatility over long periods. Historical equity mutual fund returns in India average 12-15% over 10+ year periods.
Can I withdraw my SIP anytime?
Yes, open-ended mutual fund SIPs can be redeemed anytime. However, equity funds have a 1-year lock-in for LTCG tax benefits, and ELSS funds have a mandatory 3-year lock-in.