SIP Calculator
A Systematic Investment Plan (SIP) lets you invest a fixed amount in mutual funds every month. Enter your monthly investment, expected annual return, and time horizon below to estimate how much your SIP could grow into — and how much of that is pure wealth gain from compounding.
SIP Return Calculator
Amount you invest every month
Long-term equity average is 10-14%
How long you will keep investing
Estimated Maturity Value
Total Invested
Wealth Gained
Return Composition
Wealth Accumulation Over Time
Hover or tap on the bars to inspect growth details
Yearly Investment BreakdownShow Details
| Year | Total Invested | Interest Earned | Future Value |
|---|---|---|---|
| Year 1 | ₹1,20,000 | ₹8,093 | ₹1,28,093 |
| Year 2 | ₹2,40,000 | ₹32,432 | ₹2,72,432 |
| Year 3 | ₹3,60,000 | ₹75,076 | ₹4,35,076 |
| Year 4 | ₹4,80,000 | ₹1,38,348 | ₹6,18,348 |
| Year 5 | ₹6,00,000 | ₹2,24,864 | ₹8,24,864 |
| Year 6 | ₹7,20,000 | ₹3,37,570 | ₹10,57,570 |
| Year 7 | ₹8,40,000 | ₹4,79,790 | ₹13,19,790 |
| Year 8 | ₹9,60,000 | ₹6,55,266 | ₹16,15,266 |
| Year 9 | ₹10,80,000 | ₹8,68,215 | ₹19,48,215 |
| Year 10 | ₹12,00,000 | ₹11,23,391 | ₹23,23,391 |
| Year 11 | ₹13,20,000 | ₹14,26,148 | ₹27,46,148 |
| Year 12 | ₹14,40,000 | ₹17,82,522 | ₹32,22,522 |
| Year 13 | ₹15,60,000 | ₹21,99,311 | ₹37,59,311 |
| Year 14 | ₹16,80,000 | ₹26,84,180 | ₹43,64,180 |
| Year 15 | ₹18,00,000 | ₹32,45,760 | ₹50,45,760 |
What Is a Systematic Investment Plan (SIP) and How Does It Build Wealth?
A Systematic Investment Plan (SIP) is a disciplined financial vehicle that allows investors to deploy a predetermined sum of money into mutual funds or index baskets at regular intervals (typically monthly). Instead of attempting the hazardous task of timing market peaks and troughs, a SIP leverages two foundational pillars of modern quantitative finance: Rupee-Cost Averaging and Exponential Compound Interest.
When equity markets face temporary corrections, your fixed monthly allocation automatically purchases a higher number of mutual fund units at lower Net Asset Values (NAV). Conversely, during bullish phases, fewer units are bought at higher valuations. Over multi-year cycles, this mechanical discipline drives down your global weighted average purchase cost, allowing your portfolio to capture the full geometric growth of capital markets.
The Future Value Annuity Formula Explained
This calculator computes projected wealth using the standard future value of an annuity due equation:
FV = M × [((1 + i)^n − 1) / i] × (1 + i)
Where:
- M: The monthly contribution amount (e.g. ₹5,000, ₹10,000, or $500).
- i: The periodic monthly rate of return, calculated as (Expected Annual Return / 12 / 100). For an assumed 12% annual return, i = 12 / 1200 = 0.01.
- n: Total number of monthly installments over your horizon (Tenure in Years × 12).
- (1 + i): Multiplier accounting for beginning-of-period investment timing (annuity due).
Case Study: Compounding Across 5, 10, 15, 20 & 25 Years (₹10,000 Monthly at 12%)
Observe how the compounding effect starts slowly in the early years and transforms into a massive wealth generator in later cycles:
| Time Horizon | Total Invested (₹) | Wealth Gain (₹) | Maturity Value (₹) | Gain % of Corpus |
|---|---|---|---|---|
| 5 Years (60 Mo) | ₹6,00,000 | ₹2,24,864 | ₹8,24,864 | 27.3% |
| 10 Years (120 Mo) | ₹12,00,000 | ₹11,23,391 | ₹23,23,391 | 48.3% |
| 15 Years (180 Mo) | ₹18,00,000 | ₹32,45,760 | ₹50,45,760 | 64.3% |
| 20 Years (240 Mo) | ₹24,00,000 | ₹75,91,479 | ₹99,91,479 | 76.0% |
| 25 Years (300 Mo) | ₹30,00,000 | ₹1,59,76,351 | ₹1,89,76,351 | 84.2% |
Key Insight: By Year 25, over 84% of your total wealth comes purely from compound interest earnings, while your own out-of-pocket contributions account for only 15.8%. For insights on supercharging this growth, explore our guide on Step-Up SIP vs Regular SIP Strategies.
Strategic Tips for Maximizing SIP Growth
- Never Pause During Market Corrections: Market drawdowns are when your monthly contribution buys the cheapest units. Pausing during bear markets eliminates the rupee-cost averaging advantage.
- Adopt an Annual Step-Up: Increasing your SIP by 10% each year in tandem with salary hikes more than doubles your 20-year terminal corpus.
- Direct Plans vs Regular Plans: Choosing Direct mutual fund plans saves 0.5% to 1.0% in annual distributor commissions, compounding into several additional lakhs over a 15-year window.
- Rebalance Periodically: As your target retirement or goal date approaches within 3 years, systematically transfer capital into debt instruments to protect gains.
Frequently Asked Questions
Are SIP returns guaranteed by mutual fund houses or government bodies?+
No. SIP is an automated investment method, not a fixed-income banking product. Underlying returns depend entirely on the performance of the equity or hybrid mutual fund portfolio and general economic conditions. The expected return entered here serves as an analytical estimation model.
What expected annual rate of return is considered realistic for long-term equity SIPs?+
Broad, diversified equity indices (such as the Nifty 50, S&P 500, or MSCI World) have historically compounded in the 10% to 14% nominal annualized range across 10+ year time horizons. For conservative long-term financial modeling, 10% to 12% is widely recommended by financial planners.
Is a SIP strictly better than a one-time Lump Sum investment?+
In a purely upward trending market, investing a lump sum on day one mathematically yields higher returns because all capital is deployed immediately. However, SIP removes market-timing anxiety, provides rupee-cost averaging in volatile conditions, and perfectly aligns with monthly salaried cash flows. Read our in-depth comparison on "SIP vs Lump Sum Investing" in our Guides section.
Can I modify, pause, or cancel my SIP anytime without penalties?+
Yes. In open-ended mutual funds, you can pause, stop, increase, or decrease your monthly SIP at any time without lender or fund house penalties. You can also redeem units whenever needed, subject to standard capital gains taxation and fund-specific exit loads (typically 1% if redeemed within 12 months).
How is taxation applied to SIP returns upon redemption?+
In most jurisdictions (including India), each SIP installment is treated as an individual purchase batch with its own independent holding period. Equity units held for more than 12 months qualify for Long-Term Capital Gains (LTCG) tax rates, whereas units held under 12 months attract Short-Term Capital Gains (STCG) rates.
What is the minimum monthly amount required to start a SIP?+
Most leading mutual fund houses allow investors to begin a SIP with as little as ₹100 to ₹500 ($10 to $50) per month, making wealth accumulation accessible to individuals at any income level.
Are my financial calculations or inputs recorded on your servers?+
No. All calculations run strictly in your browser using local client-side JavaScript. No contribution numbers, portfolio goals, or user sessions are ever transmitted, tracked, or stored.
How does inflation affect my projected SIP maturity value?+
Inflation reduces the future purchasing power of money. While nominal corpus might be ₹1 Crore in 20 years, an average 6% inflation rate means its real purchasing power will equal approximately ₹31 Lakhs in today's money. This is why scaling contributions with a Step-Up SIP is critical.
Formulas on this calculator are reviewed by the AllYouTools Quantitative Research Team against official statutory standards. Read our Editorial Policy and explore full derivations in our Calculation Methodology.
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