How the SIP calculator works
A SIP (systematic investment plan) invests a fixed amount every month, usually in a mutual fund. Each instalment grows for the months remaining, so early instalments compound for longer. The calculator uses the standard future-value formula for monthly payments made at the start of each month:
- P = monthly investment
- i = monthly rate = annual return ÷ 12 ÷ 100
- n = number of months
Example: ₹10,000 a month for 10 years at 12% a year → i = 0.01, n = 120 → FV ≈ ₹23.2 lakh, of which ₹12 lakh is your own money and about ₹11.2 lakh is growth.
With step-up, the monthly amount rises by a fixed percentage every 12 months, and the calculator adds up each month's instalment separately. For a lump sum, it uses FV = P × (1 + r)^years with annual compounding.
Why time matters more than amount
| ₹10,000/month at 12% | Invested | Value |
|---|---|---|
| 10 years | ₹12 lakh | ₹23.2 lakh |
| 20 years | ₹24 lakh | ₹99.9 lakh |
| 30 years | ₹36 lakh | ₹3.53 crore |
Doubling the time from 10 to 20 years doubles what you put in, but more than quadruples the final value. That's compounding: in later years, the growth itself earns growth.
Step-up SIP
Most people's income rises over time. A step-up (or top-up) SIP raises the instalment every year, say by 10%. In the 20-year example, a 10% annual step-up turns ₹99.9 lakh into about ₹1.99 crore. Most fund houses let you set this up when you start the SIP.
Adjusting for inflation
₹1 crore in 20 years won't buy what ₹1 crore buys today. Enter an inflation rate to see the final value in today's money: Real value = FV ÷ (1 + inflation)^years. At 6% inflation, ₹99.9 lakh in 20 years is worth about ₹31 lakh today.
Choosing a return rate
No return is guaranteed. Long-run averages are a rough guide only: equity funds have historically returned more than debt funds, with far bigger swings along the way. Try a cautious rate as well as an optimistic one, and remember that fund expenses and taxes on gains reduce what you actually get. The tool doesn't recommend any investment; for advice on your situation, talk to a SEBI-registered investment adviser.
Frequently asked questions
What is a good return to assume for a SIP?
Is the SIP return the same as the fund's CAGR?
How is a step-up SIP calculated?
Are SIP gains taxed?
Can I use it for a monthly savings plan outside India?
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