What is a SIP?
A SIP, or Systematic Investment Plan, is a way of investing a fixed amount in a mutual fund at regular intervals – usually every month. Instead of needing a big lump sum, you can start with as little as ₹500 a month in many funds. The money is taken from your bank account automatically, which builds a habit of saving.
How the SIP calculator works
The calculator assumes you invest at the start of each month and that your investment grows at the expected yearly return, compounded every month. The standard formula is:
Future value = P × [(1 + i)n − 1] ÷ i × (1 + i)
- P = monthly investment
- i = monthly rate = yearly return ÷ 12 ÷ 100
- n = number of months
Example: ₹5,000 a month for 10 years at 12% a year. You invest ₹6,00,000 in total, and the estimated value is about ₹11,61,695 – nearly double what you put in. The extra ₹5,61,695 is the effect of compounding: your returns start earning returns of their own.
What is a step-up SIP?
With a step-up (or top-up) SIP, you raise your monthly amount by a fixed percentage every year, usually in line with your salary increase. For example, with a 10% step-up, ₹5,000 a month becomes ₹5,500 in the second year and ₹6,050 in the third. Even a small step-up can make a big difference over 15–20 years. Move the step-up slider to see the effect.
Things to keep in mind
- Returns are not fixed. Equity funds can give negative returns in some years. Long-term averages are only a guide.
- Time matters most. Starting five years earlier often matters more than investing a slightly larger amount.
- Costs and taxes such as the fund's expense ratio and capital gains tax reduce what you actually receive. This calculator does not include them.
- Inflation reduces what your money can buy. ₹10 lakh in 15 years will buy less than ₹10 lakh today.
For decisions about which funds to choose, read the scheme documents carefully and consider speaking to a SEBI-registered investment adviser.
Frequently asked questions
What return should I expect from a SIP?
No return is guaranteed. Equity mutual funds have historically been volatile, with good and bad years. Many people use conservative estimates of 8–12% a year for long-term planning, but past returns do not predict future returns.
Is the SIP calculator result exact?
No. It assumes the same return every year. In reality, returns change month to month, so your actual value will be different.
What is the minimum SIP amount?
Many mutual funds allow SIPs from ₹500 a month, and some from ₹100. Check the minimum amount for the specific scheme.
Does the calculator include tax?
No. It shows returns before tax and fund expenses. Capital gains tax depends on the type of fund and how long you hold it.