Monthly Investment
Investment Details
SIP Advantages
Rupee Cost Averaging
Buy more units when NAV is low, fewer when high
Disciplined Investing
Auto-debit builds consistent saving habits
Power of Compounding
Returns earn returns — exponential wealth growth
Step-Up with Income
Increase SIP yearly to match salary hikes
Total Investment
Total amount invested over the period
Estimated Returns
Wealth GainProfit earned through compounding
Total Maturity Value
1.9xInvestment + Returns at maturity
Growth Milestones
Investment vs Returns
Year-by-Year Growth
Last updated: July 2025 · Reviewed for accuracy against standard SIP formula
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a structured investment method offered by mutual funds in India that allows you to invest a fixed amount regularly — usually monthly — into a chosen mutual fund scheme. Instead of trying to time the market with a single lump-sum investment, an SIP promotes disciplined, consistent saving that naturally averages out your purchase cost over time through a mechanism called rupee cost averaging.
For example, if you invest ₹5,000 every month into an equity mutual fund, you buy more units when the NAV (Net Asset Value) is low and fewer units when it is high. Over months and years, this averaging effect can lower your per-unit cost compared to a one-time investment made at the wrong time.
How to Use This SIP Calculator
This calculator offers two modes:
- Regular SIP Mode: Enter your monthly investment amount, investment period (in years), and expected annual return rate. The calculator shows your total invested amount, estimated returns, and maturity value.
- Target Amount Mode: Enter your goal corpus (e.g., ₹1 Crore), the time horizon, and expected return. The calculator tells you exactly how much you need to invest monthly to reach that target.
You can also enable Step-Up SIP in either mode — this increases your monthly investment by a fixed percentage each year (e.g., 10%), simulating how your SIP can grow alongside your income. The calculator shows a clear side-by-side comparison of your maturity value with and without step-up, so you can see the exact extra wealth gained.
The SIP Formula Explained
SIP maturity value is calculated using the future value of an ordinary annuity formula, compounded monthly:
- M = Maturity amount (what you receive at the end)
- P = Fixed monthly investment amount
- i = Monthly rate of return = (Annual return ÷ 12) ÷ 100
- n = Total number of monthly instalments (years × 12)
Worked Example
If you invest ₹5,000 per month for 10 years (120 months) at an expected 12% annual return:
- P = 5,000
- i = (12 ÷ 12) ÷ 100 = 0.01 (1% per month)
- n = 120
Total invested: ₹6,00,000
Estimated maturity value: ₹11,61,693
Wealth gained from compounding: ₹5,61,693
Notice that your returns (₹5.6 Lakh) are almost equal to your total contributions (₹6 Lakh) — that is the power of compounding, and it becomes even more dramatic over longer periods.
SIP vs Lump Sum Investment: Which Is Better?
| Feature | SIP | Lump Sum |
|---|---|---|
| Best for | Salaried investors, regular income earners | Investors with a large one-time corpus |
| Market timing risk | Lower — rupee cost averaging smooths entry | Higher — depends on single entry point |
| Discipline | Built-in — auto-debit from bank | Requires self-control |
| Ideal market | Volatile markets actually help SIP | Consistently rising market from entry |
| Flexibility | Start, stop, pause, increase anytime | One-time decision |
In practice, many Indian investors use both. Try our Lumpsum Investment Calculator to compare.
What Expected Return Rate Should You Use?
- Equity mutual funds (7+ years): Historically 12–15% annually in India. Not guaranteed.
- Hybrid / balanced funds: Typically 9–12% annually.
- Debt funds: Typically 6–8% annually.
Use a conservative estimate (e.g., 10–12% for equity) — better to be pleasantly surprised than disappointed.
Frequently Asked Questions
How does a SIP calculator work?
A SIP calculator uses the future value of an ordinary annuity formula: M = P × [((1 + i)n − 1) / i] × (1 + i), where P is the monthly investment, i is the monthly rate of return, and n is the total number of monthly instalments. It gives you an estimated maturity amount — total invested, estimated gains, and final corpus value.
What is a realistic expected return rate for a long-term equity SIP in India?
Diversified equity mutual funds have historically averaged 12–15% annual returns over 7+ years. For planning, using 10–12% is a conservative and sensible approach.
Can I pause, skip, or stop my SIP anytime?
Yes. Most platforms let you pause or cancel without penalty. Some fund houses cancel after 2–3 consecutive missed payments — check your fund's policy.
Is SIP better than a lump sum investment?
It depends. SIP reduces market-timing risk through rupee cost averaging. Lump sum can outperform if timed perfectly — but that is extremely difficult. Many investors use both.
Are SIP returns taxable in India?
Yes. Each instalment is a separate purchase. Equity units held 1+ year: LTCG (exempt up to ₹1.25 lakh/year, 12.5% above). Under 1 year: STCG at 20%. Debt funds have different rules. Verify with a tax advisor.
What is a step-up SIP and how does it work?
A step-up SIP increases your monthly investment by a fixed percentage each year (e.g., 10%). It mirrors income growth. ₹5,000/month stepped up 10% yearly for 20 years at 12% creates a substantially larger corpus than a flat ₹5,000/month SIP. Use the toggle on this calculator to see the exact difference.
What is the minimum amount to start a SIP in India?
Most fund houses allow SIPs from ₹500/month. Some schemes require ₹1,000/month minimum.
How is SIP different from a Recurring Deposit (RD)?
RD offers fixed guaranteed returns from a bank. SIP invests in market-linked funds with fluctuating but potentially higher returns. RD interest is taxed at your slab rate; equity SIP benefits from LTCG exemptions up to ₹1.25 lakh/year.
What happens if I withdraw from my SIP before the tenure ends?
You can redeem anytime unless it's an ELSS fund (3-year lock-in per instalment). Early withdrawal of equity units held under 1 year may attract exit load and STCG tax. Units beyond 1 year typically have no exit load.
Can I have multiple SIPs running at the same time?
Yes, there is no restriction. Many investors spread SIPs across large-cap, mid-cap, flexi-cap, and debt funds for diversification. Ensure your total monthly commitment is affordable.