SIP Calculator

What a SIP actually is

A Systematic Investment Plan is a standing instruction to put a fixed amount into a mutual fund on the same date each month. That is the whole idea. It is not a product you buy, not an asset class, and not a scheme with a guaranteed rate — it is a schedule. The returns come from whatever the underlying fund holds.

Two things make the schedule useful. The first is that it removes the timing decision: you are not deciding each month whether the market looks expensive, because the instruction has already been given. The second is rupee cost averaging — a fixed rupee amount buys more units when the price is low and fewer when it is high, so your average cost per unit ends up below the average price over the period.

Rupee cost averaging lowers your average entry price. It does not protect you from a falling market — if the fund is down over your whole holding period, so are you.

The formula behind the numbers

This calculator uses the future value of an annuity-due, which is the standard across the Indian fund industry:

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

• P — the monthly instalment
• i — the monthly rate of return, which is the annual rate divided by 12
• n — the total number of instalments (years × 12)
• FV — the projected value at the end

Why the trailing (1 + i)

A SIP instalment is debited at the start of the month and is invested for that whole month. In annuity terms it is an annuity-due rather than an ordinary annuity, and that is worth one extra period of growth on every instalment. Drop the term and you understate a long SIP by a meaningful amount — it is also why a calculator that omits it will disagree with your fund statement.

A worked example

₹10,000 a month for 15 years at an assumed 12% a year. Here i = 0.01 and n = 180. You contribute ₹18,00,000 in total, and the projection comes to roughly ₹50.5 lakh — meaning about ₹32.5 lakh, nearly two-thirds of the final amount, is growth rather than contribution. That ratio is the single most useful thing this calculator shows, and it climbs steeply with time.

The step-up projection cannot use this formula, because the instalment changes every year. The calculator simulates those month by month instead — which is also where the year-by-year table comes from.

Why time matters more than the amount

Compounding is not linear, and the intuition most people carry is badly wrong. Doubling your instalment doubles your outcome. Doubling your time horizon does something much larger, because the growth earned in early years spends the remaining years compounding on itself.

Read the last column rather than the third. Over five years you are essentially just saving — barely a quarter of the outcome is growth. By year 25, five-sixths of it is. Nothing about the instalment changed; only the number of years the earlier money had to work.

Step-up SIP: the most underused setting

Most people start a SIP at whatever they could afford in the year they started, and then never touch it. Meanwhile their income rises. A step-up SIP raises the instalment by a fixed percentage each year, and the effect over a long horizon is disproportionate.

A 10% step-up roughly doubles the projected outcome against the flat SIP. You do contribute considerably more along the way, so this is not free money — but the increase is designed to track a salary that is rising anyway, which is why it tends to be painless in practice.

The number almost every calculator hides

A projection of ₹1 crore in 25 years is not ₹1 crore as you understand the amount today. Inflation erodes what that money buys, and over the horizons SIPs are built for, the erosion is severe.

This is why the calculator reports the inflation-adjusted figure alongside the headline one. If you are investing toward a real goal — a home, education, retirement — the cost of that goal is rising too, and the nominal projection on its own will quietly mislead you about whether you are on track.

SIP or lumpsum

The honest answer is that it depends on something you cannot know in advance. If markets rise steadily from the day you invest, a lumpsum wins, because all of the money was working from day one. If markets fall first and recover later, the SIP wins, because the later instalments bought at lower prices.

• A SIP matches how most people receive money — monthly — so for most it is not really a choice.
• A lumpsum concentrates timing risk into a single date, which is uncomfortable in proportion to the amount.
• The two combine: this calculator takes an opening lumpsum alongside the monthly instalment.
• A large windfall is often staged in over several months rather than deployed at once, which is simply a short SIP.

Mistakes that cost the most

Stopping when markets fall

This is the expensive one. A falling market is when your fixed instalment buys the most units, so cancelling a SIP during a downturn removes exactly the purchases the strategy depends on. The discipline is the entire mechanism.

Assuming a rate you saw in a good decade

Plugging in 15% because a fund did that recently produces a comfortable number and a plan that misses. Model a pessimistic rate as well and see whether the goal survives it.

Planning in nominal rupees

Targeting "₹1 crore for retirement" without asking what ₹1 crore buys in the year you retire is the most common planning error in this whole area.

Ignoring costs and tax

Projections here are gross. The expense ratio is deducted from fund returns before you ever see them, and gains are taxable on redemption under rules that change from time to time. Both reduce what actually reaches you.

Important disclaimer

This calculator is for education and illustration only. It is not investment advice, a recommendation, or a solicitation to buy any security or scheme.

• We are not a registered investment adviser, and nothing here is tailored to your circumstances, goals or risk tolerance.
• Every figure is a projection from an assumed constant rate of return. Real returns vary year to year and can be negative.
• Past performance does not indicate future results.
• Projections are gross of expense ratio, exit load, transaction costs and taxes, all of which reduce actual returns.
• Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing.
• Consult a SEBI-registered investment adviser before making financial decisions.