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SIP Calculator

💧 SIP — Monthly investing

Monthly compounding (r/12). Hover dots to see values.
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What is a SIP

A Systematic Investment Plan (SIP) is a way of investing a fixed amount in a mutual fund at regular intervals, usually every month, instead of putting in the full amount at once. Each installment buys units of the fund at that day's Net Asset Value (NAV), so you end up buying more units when prices are low and fewer units when prices are high. This is called rupee cost averaging, and it happens automatically over time — you're not trying to time the market.

A lumpsum investment puts the entire amount to work on day one, so its return depends heavily on where the market happens to be on that single day. A SIP spreads the same total amount across many purchase dates instead, which smooths out the impact of short-term ups and downs.

Most fund houses in India let you start a SIP with ₹100 to ₹500 a month, and you can usually increase, pause, or stop it whenever you want.

How SIP returns are calculated

The future value of a SIP is calculated with a standard compound-interest formula:

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

Here:

The part inside the brackets, ((1 + i)^n − 1) / i, is the standard formula for the future value of a series of equal monthly deposits growing at rate i — it adds up what every month's contribution is worth by the end of the term, compounding along the way.

The trailing (1 + i) applies only when each installment is deposited at the start of the month rather than the end. Money invested on day 1 earns one extra month of compounding compared to money invested on the last day of the month, so multiplying by (1 + i) accounts for that one additional period of growth. If your SIP debits at the end of the month, this term is dropped.

Example

Take a SIP of ₹15,000 a month, expected return of 12% a year, for 15 years, with installments at the end of the month (so no trailing (1 + i)).

i = 12% ÷ 12 = 0.01 per month
n = 15 × 12 = 180 months

FV = 15,000 × [((1.01)^180 − 1) / 0.01] ≈ ₹74,93,700

Total invested over 15 years = ₹15,000 × 180 = ₹27,00,000, so the gain from compounding is roughly ₹47,93,700 — nearly 1.8 times what you put in.

Now stop the same SIP after 10 years instead: n = 120 months.

FV = 15,000 × [((1.01)^120 − 1) / 0.01] ≈ ₹34,50,600, against ₹18,00,000 invested — a gain of about ₹16,50,600.

Compare the two: the corpus grows from about ₹34.5 lakh at 10 years to about ₹74.9 lakh at 15 years — an increase of roughly ₹40.4 lakh in just the last 5 years, more than the entire corpus built in the first 10 years. This is compounding doing more work as the base gets bigger; the last few years of a long SIP typically add more to your corpus than the first several years combined.

Frequently asked questions

Can I stop a SIP anytime?
Yes. A SIP is not a locked-in contract, unless it's in an ELSS fund with a 3-year lock-in for tax saving. You can pause or stop future installments whenever you want; money already invested stays invested until you redeem it.

Is SIP return guaranteed?
No. A SIP is just a way of investing in mutual funds at regular intervals — the underlying fund can still go up or down with the market. Returns are market-linked and not guaranteed, and past performance doesn't guarantee future results.

What happens if I miss a month?
Usually nothing serious. Most fund houses skip that installment and continue from the next month; a few missed payments in a row can lead to the SIP being cancelled by the fund house, but there's typically no penalty on you.

Is SIP better than FD?
Not automatically. A Fixed Deposit gives a fixed, guaranteed rate; a SIP in an equity fund has historically delivered higher long-term returns but carries market risk and can lose value in the short term. Which is "better" depends on your goal, time horizon, and how much risk you can handle.

This content is for educational purposes only and is not investment advice.

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