SIP Calculator
Project the growth of your Systematic Investment Plan. See how regular, disciplined monthly contributions grow into a substantial wealth corpus, and compare plans.
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SIP Growth Schedule Table
| Year | Total Investment | Estimated Profit | Future Value |
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Formula Transparency
A Systematic Investment Plan (SIP) uses the future value of an ordinary annuity compounding formulas. Since mutual fund deposits are made monthly, the interest rate is scaled to monthly periods and compounded at every contribution step.
- M: Future Value / final corpus amount.
- P: Periodic monthly investment installment.
- i: Monthly interest rate (calculated as r / 12 / 100).
- n: Number of payments / total periods (duration years * 12).
- r: Expected annual rate of return (e.g. 12% is entered as 12).
The annuity formula compounds each monthly installment for the remaining duration. Because early deposits have more time to compound, they accumulate the bulk of the interest, highlighting why starting a SIP early yields maximum compound efficiency.
Example Calculation
Suppose you start a monthly SIP of $500 at a **12% expected annual return** for **1 year** (12 months):
- Monthly rate (i): 12% / 12 = 1% per month = 0.01.
- Number of deposits (n): 1 year * 12 = 12.
- Month 1 deposit: $500 compounds for 12 months: $500 * (1.01)^12 = $563.41.
- Month 12 deposit: $500 compounds for 1 month: $500 * (1.01)^1 = $505.00.
- Future Value (M): Sum of all compounded deposits = $6,405.
- Total Invested: $500 * 12 = $6,000. Interest earned = $405.
Common SIP Mistakes
- Pausing during market downturns: Downturns are when SIPs are most effective because your fixed monthly deposit purchases mutual fund units at discounted prices.
- Ignoring expense ratios and exit loads: High management fees (expense ratios) of actively managed mutual funds eat into compound interest margins over 15-20 years.
- Over-diversification: Investing in 10 different mutual funds with overlapping stock holdings increases fees without offering actual diversification benefits.
SIP Investment Tips
- Use Step-Up SIP: Increasing your monthly SIP installment by 10% every year as your income grows can more than double your final accumulated wealth corpus.
- Match horizon to asset class: For short timelines (less than 3 years), use debt SIPs; for long horizons (5+ years), equity SIPs help absorb short-term stock market corrections.
Related Tools
Frequently Asked Questions
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a method of investing a fixed sum of money regularly in mutual funds or other investment platforms. It allows you to invest small amounts periodically (typically monthly) rather than requiring a large upfront lump sum.
How does rupee cost averaging work in SIP?
Since you invest a fixed amount regularly, you buy more mutual fund units when prices are low and fewer units when prices are high. Over time, this averages out the cost of acquisition per unit, reducing the impact of market volatility without needing to time the market.
What returns can I expect from a stock market SIP?
Historically, long-term equity SIPs (over 10-15 years) have averaged between 10% and 15% annual returns depending on the asset class and fund selections. However, equity investments carry market risk and past performance does not guarantee future results.
Can I pause or stop an active SIP?
Yes, SIPs are highly flexible. You can pause or stop your SIP at any time without penalty, and the accrued funds will continue to remain invested unless you choose to redeem them.
Our financial calculators are built to match standard compound interest and loan amortization mathematics. Every calculation is reviewed for mathematical accuracy against official guidelines from national regulatory boards.