SIP Calculator

How to use the SIP Calculator

A Systematic Investment Plan (SIP) is a fixed monthly contribution into a mutual fund or ETF. It removes the guesswork of market timing — you invest the same amount every month, buying more units when markets dip and fewer when they rally. This calculator projects the corpus you will accumulate.

Step by step

• Monthly Investment — the SIP amount you can sustain every month, in today’s money.
• Expected Annual Return — your assumption for the fund’s long-term return. Historically, diversified equity funds have returned 10–12% over multi-decade horizons, but the future is not guaranteed.
• Duration — how many years you’ll keep investing.
• Step-up — enable this if you plan to increase the SIP every year (for example, in line with salary hikes). 5–10% is a common step-up.

The output shows the total amount you’ll have invested, the projected final value, and the gain. The chart and schedule show how the gap between invested and value widens over time — that gap is compounding doing its work.

Why it’s important

SIPs enforce discipline, smooth out volatility via rupee/dollar-cost averaging, and take advantage of the very long compounding runway that young investors have. A modest increase in either the monthly amount or the horizon can move your end number far more than obsessing over the last 1% of return.

Worked examples

Always treat projected returns as estimates and review the plan annually.

Real-life scenario: why use a SIP for a child’s education

Tuition keeps rising, and time is your biggest ally. If your newborn starts college in 18 years and fees today are $40,000 per year, at 6% education inflation you’ll need roughly $114,000 per year when the bill arrives. A monthly SIP of about $500 at 11% return for those 18 years builds a corpus of nearly $360,000 — enough to fund a four-year degree without loans. Wait until the child is eight to start, and you’ll need close to $1,600 per month to hit the same target.

The same logic applies to a down payment, a sabbatical, or a wedding fund. A SIP turns intimidating long-term goals into a small, automatic monthly habit, and the step-up option lets the contribution rise with your salary so the plan stays sustainable through career milestones.

How the math works: the SIP future-value formula

A Systematic Investment Plan (SIP) is an annuity, so the calculator uses the future value of an ordinary annuity formula:

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

where PMT is the monthly contribution, i is the monthly rate (annual rate ÷ 12, as a decimal), and n is the number of monthly contributions. The trailing × (1 + i) treats each contribution as invested at the start of the month (an "annuity due"). Total invested is simply PMT × n; wealth gained is FV − total invested.

Worked example. A $500 monthly SIP at 11% annual for 18 years: i = 0.11/12 = 0.009167, n = 216. (1.009167)²¹⁶ ≈ 7.162, so the bracketed term is (7.162 − 1)/0.009167 ≈ 672.2, and FV ≈ $500 × 672.2 × 1.009167 ≈ $339,000. You put in $108,000 over 18 years; the remaining ~$231,000 is compounded growth.

The step-up option multiplies the contribution by a fixed percentage every 12 months — the math simply sums the future-value of each year’s contribution stream using the appropriate PMT. A 10% annual step-up on the same $500 base typically lifts the final corpus by 40-55% because later, larger contributions still benefit from meaningful compounding.

Frequently asked questions