SIP Calculator
Estimate the future value of your Systematic Investment Plan (SIP) — monthly mutual fund investments compounded over time.
How to use this sip calculator
- 1Enter your monthly SIP contribution amount.
- 2Enter the expected annual return — check the fund's historical CAGR for reference.
- 3Enter the investment period in years.
- 4SIP returns are market-linked and not guaranteed — use historical returns as estimates only.
- 5Increasing your SIP amount annually (step-up SIP) dramatically improves the final corpus.
How it's calculated
FV = PMT × ((1+i)^n − 1) ÷ i × (1+i). Monthly compounding with beginning-of-period payments.
About the SIP Calculator
The SIP has become one of the most accessible wealth-building tools available to middle-class investors worldwide. By automating regular investments in market-linked mutual funds, SIPs remove the two biggest barriers to investment success: the need for a large lump sum to start, and the emotional decision-making that causes most investors to buy high and sell low.
The mathematics of SIP compounding are compelling. $500/month invested for 20 years at 12% annual return grows to approximately $497,000 — from total contributions of only $120,000. The $377,000 difference is entirely compounding returns. In the last five years of this 20-year period, your portfolio likely adds more value than it did in the entire first 15 years combined — this acceleration is the signature of compound growth.
The behavioral advantage of SIPs is equally important as the mathematical advantage. When markets fall 30% — as they do periodically — SIP investors automatically buy more units at lower prices, accumulating additional wealth without requiring any emotional courage or timing decision. Lump-sum investors face the psychological challenge of watching their portfolio fall and resisting the urge to sell. The automated, systematic nature of SIPs removes this challenge entirely.
For long-term wealth creation, the most important SIP decisions are: starting early (even a small SIP at 25 dramatically outperforms a large SIP at 35), maintaining the SIP through market downturns without pausing (which is when you buy the most units per dollar), and incrementally increasing the contribution each year as income grows.
Frequently asked questions
What is a SIP and how does it work?
A Systematic Investment Plan (SIP) is a method of investing a fixed amount in a mutual fund at regular intervals — typically monthly. Each installment buys units at the current Net Asset Value (NAV). When NAV is high, you buy fewer units; when NAV is low, you buy more. Over time, this rupee-cost averaging smooths out the impact of market volatility and typically results in a lower average cost per unit than lump-sum investing during volatile periods. SIPs are particularly effective for long-term wealth creation because they harness both compounding returns and systematic, emotion-free investing.
Is a 12% annual return from SIP realistic?
12% nominal annual return is achievable but not guaranteed from equity mutual funds over long periods. Indian equity markets (Sensex/Nifty) have historically returned approximately 12–15% CAGR over 15+ year periods. US equity markets (S&P 500) have returned approximately 10% annually over the long run. However, past performance does not guarantee future returns, and short-term periods can produce significantly lower or negative returns. Use 10–12% as an optimistic scenario and 7–8% as a conservative estimate. The most important variable is not the assumed return but the investment period — longer periods dramatically reduce the impact of return-rate variation.
What is a step-up SIP and should I use one?
A step-up SIP automatically increases your monthly contribution by a fixed percentage or amount each year, typically timed with annual salary increments. If you start a SIP at $500/month and increase by 10% annually, year 2 becomes $550/month, year 3 $605, and so on. The impact on final corpus is dramatic: a $500/month SIP at 12% for 20 years accumulates approximately $497,000. The same SIP with 10% annual step-up accumulates approximately $893,000 — nearly double. The additional investments are manageable because each increase aligns with income growth, so lifestyle is not compressed.
How do I choose between direct and regular SIP plans?
Direct plans are purchased directly from the mutual fund company without a distributor or broker. They have lower expense ratios (typically 0.5–1% lower annually) because no commission is paid to intermediaries. Regular plans go through a distributor who receives commission from the fund's expense ratio. Over 20 years, a 1% lower expense ratio on a growing corpus can mean 15–20% more final wealth — a substantial difference. If you are comfortable selecting funds yourself and monitoring performance periodically, direct plans are almost always preferable. Use platforms like Zerodha Coin, Groww, or Kuvera for direct plan access.