SIP Calculator

What is a SIP?

A Systematic Investment Plan (SIP) is a way to invest a fixed amount into a mutual fund every month (or week or quarter) on auto-pilot. The amount is auto-debited from your bank account on a chosen date and used to buy units of the mutual fund at that day's NAV. Because you buy units at different prices across cycles, you benefit from rupee-cost averaging — you accumulate more units when markets dip and fewer when they rally.

The SIP formula

The future value of a monthly SIP, assuming end-of-period investment compounded monthly, is:

• P = monthly investment amount
• r = expected annual return ÷ 12 ÷ 100 (monthly rate)
• n = total months (years × 12)

A worked example

Suppose you start a SIP of ₹10,000 a month at the age of 25, and continue till 50 — that's 25 years. Assume an equity fund returns 12% a year. Plug in: P = 10,000, r = 0.01, n = 300. The maturity value comes to roughly ₹1.89 crore against a total investment of ₹30 lakh. That's the mathematics of compounding doing the heavy lifting.

Why SIPs work for Indians

• Discipline beats timing. No one can call the market top or bottom; a SIP removes the question.
• Affordable starts. Most fund houses now accept SIPs from ₹500/month — a coffee subscription.
• Goal mapping. Tie each SIP to a specific goal — college fund, home down-payment, retirement — to stay motivated.
• Tax efficiency. Equity-fund gains held over a year are taxed at 12.5% LTCG with ₹1.25L annual exemption (FY 2024–25 onwards).
• Step-up SIPs. Increase the monthly contribution by 5–10% each year as your salary grows — corpus growth is enormous.

Tips for choosing a SIP fund

1. Prefer direct plans, not regular plans — you save ~1% expense ratio yearly.
2. Look at 10-year rolling returns, not 1-year stars.
3. Watch downside capture in bear markets — a fund that falls less compounds faster.
4. Limit to 4–6 funds across categories — large-cap, flexi-cap, mid-cap, debt.
5. Review yearly, rebalance only when allocation drifts >5%.

Frequently asked questions