SIP Calculator

How the number is worked out#

A systematic investment plan buys units every month, and each instalment compounds for however long it has left to run. The first ₹5,000 works for the full tenure; the last one works for a month. The standard formula treats it as an annuity due — money in at the start of each month:

M = P × ([(1 + i)^n − 1] ÷ i) × (1 + i)

Where P is the monthly instalment, i is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of instalments. This is the same formula the fund houses and broker calculators use, so the figure above should match theirs to within a rupee or two.

A worked example#

₹5,000 a month for ten years at an assumed 12% a year:

Note where the money comes from. You contributed ₹6 lakh; the remaining ₹5.6 lakh is compounding. Run the same SIP for twenty years and the invested amount doubles to ₹12 lakh while the value reaches roughly ₹50 lakh — the second decade does most of the work.

The assumption doing the heavy lifting#

12% is not a promise. It is a common planning number drawn from long-run Indian equity index returns, and any individual decade can come in well below it. Equity SIP returns are not a rate the way an FD rate is a rate: they are an average over a path that includes drawdowns. A fund that averages 12% over fifteen years will have spent some of those years down 30%.

Try the calculator at 8% and at 15% before you plan around 12%. The gap between those two over twenty years is the difference between ₹29 lakh and ₹75 lakh on the same ₹5,000 a month — which tells you the return assumption matters more than the instalment.

What this does not include#

Step-up. Most people raise their SIP as income rises. This calculator holds the instalment flat; a 10% annual step-up on ₹5,000 over ten years lands nearer ₹18 lakh than ₹11.6 lakh.

Expense ratio. Fund returns are quoted after the expense ratio is deducted, so if you are using a fund's historical return the cost is already in the number. If you are using an index return, subtract roughly 0.2% for an index fund or 1% to 1.8% for an active one.

Tax and exit load. Equity gains above the annual exemption are taxed on redemption, and units sold within a year of purchase attract short-term rates. Because a SIP buys units on 120 different dates, each instalment has its own holding period.

Questions#

Does the date of the month I invest on matter?#

Over a long horizon, almost not at all. Studies of Indian equity SIPs across every possible SIP date find differences of a few basis points over ten years. Pick a date shortly after your salary lands so the mandate does not bounce.

Should I stop the SIP when the market falls?#

Falling markets are when a SIP buys the most units for the same instalment. Stopping in a drawdown converts a plan that depends on averaging into one that bought only at high prices. The behaviour is the product, not the fund.

Is a SIP different from a mutual fund?#

A SIP is a way of investing, not a thing you invest in. You run a SIP into a fund. The mutual fund calculator does the same maths with a one-time lumpsum option alongside.