SIP Calculator

How This SIP Calculator Works

A Systematic Investment Plan (SIP) means investing a fixed amount at regular intervals — typically monthly — into a mutual fund, rather than putting in one lump sum. Each installment buys units at that month's prevailing Net Asset Value (NAV), and every installment then compounds independently from the date it was invested until your investment horizon ends. This calculator assumes each month's installment goes in at the start of the month and compounds at your assumed annual rate, converted to an equivalent monthly rate. The result is a future value that reflects both the total amount you put in and the compounding each installment earns over its own remaining tenure.

Because later installments have less time to compound than earlier ones, the bulk of your final corpus in a long-running SIP typically comes from the installments made in the first several years — not the ones made just before maturity. This is exactly why financial planners emphasize starting early: an installment invested in year one of a 20-year SIP compounds for nearly two decades, while one invested in year nineteen compounds for barely a year.

Rupee-Cost Averaging: Why SIP Timing Differs from Lumpsum

When markets fall, your fixed monthly SIP installment buys more units at the lower NAV; when markets rise, the same installment buys fewer units at the higher NAV. Averaged across many months, this tends to smooth out your effective purchase price compared to investing the entire amount on a single date — a mechanism commonly called rupee-cost averaging. It doesn't eliminate market risk or assure a better outcome than a lumpsum investment; it simply spreads your entry price across many dates instead of concentrating it on one.

In a sustained upward market, a lumpsum investment made at the start usually outperforms an equivalent SIP, since the SIP's early installments are smaller and some money enters later at higher prices. In a volatile or falling market, SIP tends to reduce the damage from bad timing, since you're not committing the entire amount at a single unfavorable price point. Neither approach is inherently superior — the outcome depends heavily on the market path your specific investment period happens to follow, which cannot be known in advance.

Worked Example

A ₹10,000 monthly SIP at an assumed 12% p.a. return for 10 years, calculated the way the tool above does it:

Of the final ₹23.23 lakh corpus, just under half (₹12 lakh) is money you actually put in — the rest is the compounding effect working on installments made across the full 10-year window. The 12% figure here is an assumed rate you can adjust, not a promised outcome; a genuinely market-linked fund's actual year-to-year return will differ from this smooth, constant assumption.

SIP Returns Are Really XIRR, Not a Single Fixed Rate

Because each SIP installment is invested on a different date and compounds for a different length of time, the honest way to measure your actual annualized return once you redeem is XIRR (Extended Internal Rate of Return) — a calculation that accounts for the exact date and amount of every cash flow, in and out. A plain CAGR calculation, which assumes a single lump sum invested on one date, understates the complexity of a SIP's cash flows and isn't the right tool for measuring what a SIP actually earned you.

This calculator uses a single assumed annual rate applied uniformly to every installment purely to project a future value — it is not simulating month-to-month market fluctuations. When you eventually check your actual SIP performance on a fund house statement or portfolio tracker, look for the XIRR figure specifically, not a simple average of the fund's yearly returns, for an accurate picture of what your money actually earned.

SIP vs Other Regular Savings Options

SIPs in market-linked mutual funds sit at a different point on the risk spectrum compared to fixed-rate recurring deposits or small-savings schemes:

Neither is universally better — a recurring deposit's rate is fixed and known in advance but generally lower over long horizons, while a SIP's potential return is higher on average over long periods historically but comes with the possibility of a lower, or even negative, outcome over shorter or unluckily timed periods.

Why "Expected Return" Is an Assumption, Not a Promise

The return rate you enter into this calculator is your own assumption — commonly based on a fund category's long-term historical average, a benchmark index's past performance, or your own risk expectations. It is not a projection endorsed by any fund house, and mutual fund investments are subject to market risk: actual returns can be higher or lower than any assumed rate, including negative in poor market years. Use this tool to compare different assumed-return scenarios against your goals, not as a forecast of what a specific fund will actually deliver.

Tax on SIP Redemptions

Each SIP installment is treated as a separate investment for tax purposes, with its own purchase date — this matters because holding period determines whether a gain is long-term or short-term when you eventually redeem. For equity-oriented funds, units held for more than 12 months qualify for long-term capital gains treatment, taxed at 12.5% on gains above the ₹1.25 lakh per-year exemption; units held 12 months or less are taxed as short-term gains at the applicable short-term rate.

Because a SIP builds up units across many purchase dates, a single redemption late in the SIP's life can involve a mix of long-term and short-term units, taxed differently depending on how long each specific batch was held. Debt-oriented funds follow a different tax treatment than equity funds — check the fund's category before assuming the equity rates above apply.

When a SIP Might Not Be the Right Fit

SIPs work best when you can commit to a monthly installment consistently over several years, since interrupting or stopping a SIP partway through generally means missing out on the compounding that later years would otherwise have added. If your goal is very short-term (under 2-3 years) or you're uncomfortable with the value of your investment fluctuating with the market, a fixed-rate instrument like a recurring deposit or a short-tenure fixed deposit may better match your needs than an equity-oriented SIP.

Step-Up SIPs: Increasing Your Installment Over Time

This calculator projects a flat monthly installment held constant for the entire tenure, but many investors instead use a "step-up" or "top-up" SIP, where the monthly amount is increased periodically — commonly once a year, in line with an expected rise in income. Because a step-up SIP puts in more money in later years than a flat SIP of the same starting amount, its projected future value is higher than what this calculator shows for the same initial installment, though by how much depends entirely on the step-up percentage and frequency you choose. If your income is likely to grow meaningfully over your investment horizon, running this calculator with a higher flat monthly figure can give you a rough sense of where a step-up plan might land, even though it won't model the exact year-by-year increase. A step-up approach also tends to suit investors better psychologically, since the incremental increase is usually small relative to a growing salary, making it easier to sustain consistently than committing to a large flat installment from day one.