What is a SIP and Why Calculate It?
A Systematic Investment Plan (SIP) lets you invest a fixed amount in a mutual fund every month — often as little as ₹500. Instead of trying to time the market with a lump sum, you buy a few units every month: more units when prices are low, fewer when they are high. Over many years this habit, combined with compounding, can build a large corpus from modest monthly savings.
The hard part is imagining what a small monthly amount turns into after 10, 20 or 30 years. This SIP calculator answers that question in seconds and shows the growth year by year, so you can set realistic goals for a house down payment, a child’s education or retirement.
How to Use the SIP Calculator
- Monthly Investment: the amount you plan to invest every month, for example ₹5,000.
- Expected Annual Return: your assumed yearly return. Use a conservative figure — it is better to be pleasantly surprised than short of your goal.
- Time Period: how many years you will keep investing.
- Review the results: total amount invested, estimated returns and the final value, followed by a year-by-year table showing how the corpus builds up.
SIP Formula
- M = maturity value
- P = monthly SIP amount
- i = expected monthly return = annual rate ÷ 12 ÷ 100
- n = number of monthly instalments
The final × (1 + i) assumes you invest at the beginning of each month, which matches how most SIPs work in practice.
Worked example
You invest ₹5,000 a month for 10 years and expect 12% a year. Here i = 0.01 and n = 120. The formula gives a maturity value of about ₹11.62 lakh. You put in ₹6 lakh, so roughly ₹5.62 lakh is growth.
The Power of Time: Same SIP, Different Durations
Here is ₹5,000 a month at an assumed 12% a year:
| Duration | Total Invested | Estimated Value | Wealth Gained |
|---|---|---|---|
| 10 years | ₹6,00,000 | ₹11,61,695 | ₹5,61,695 |
| 20 years | ₹12,00,000 | ₹49,95,740 | ₹37,95,740 |
| 30 years | ₹18,00,000 | ₹1,76,49,569 | ₹1,58,49,569 |
Going from 20 to 30 years adds only ₹6 lakh of your own money but more than triples the final value. This is why financial planners keep repeating one piece of advice: start as early as you can, even with a small amount.
How much does the return rate matter?
The same ₹5,000 a month for 20 years at different rates:
| Annual Return | Estimated Value |
|---|---|
| 10% | ₹38,28,485 |
| 12% | ₹49,95,740 |
| 14% | ₹65,81,731 |
A couple of percentage points makes a big difference over two decades. That is why low-cost funds (with a smaller expense ratio) and staying invested through market ups and downs both matter.
Tips for Better SIP Planning
- Increase your SIP every year. Raising it by 10% each year as your salary grows can make a dramatic difference to the final amount.
- Match the fund to the goal. Equity funds suit goals more than 5–7 years away; for nearer goals, debt or hybrid funds are usually more suitable.
- Don’t stop during a market fall. Falling markets are when your SIP buys more units cheaply.
- Account for inflation. ₹50 lakh twenty years from now will buy much less than it does today. At 6% inflation, prices roughly triple in 20 years.
Related Calculators
- EMI Calculator — balance your loan EMIs against your monthly investments.
- Percentage Calculator — work out what percentage of your income you are investing.
- Loan Calculator — see the full cost of a loan including fees.