SIP Calculator

A Systematic Investment Plan, or SIP, is a way of investing a fixed amount of money at regular intervals — almost always monthly — into a mutual fund or similar pooled investment. Rather than trying to time the market with a large one-off deposit, a SIP investor commits to a steady monthly contribution and lets compounding do the heavy lifting over years or decades.

SIPs are especially popular in India, where they have become the default vehicle for long-term equity exposure. But the underlying mechanics — automated periodic contributions into a diversified fund — are identical to a 401(k) payroll deferral in the United States or a regular ISA contribution in the United Kingdom. The math is the same. Only the wrapper changes.

A SIP is mathematically a future-value-of-annuity calculation. If you contribute P at the start of every month for n months at a monthly return r, the final corpus is:

Where each variable represents:

• FV = final corpus (maturity value)
• P = monthly investment amount
• r = monthly return = annual return / 12
• n = total number of monthly contributions

The final (1 + r) factor reflects that each contribution is made at the startof the month and therefore earns one extra month of return compared with end-of-month contributions. This is the standard “annuity due” convention used by most SIP calculators. The calculator above applies this formula iteratively so it can also show a year-by-year breakdown.

Worked example: a monthly SIP of ₹10,000 for 15 years at an assumed 12% annual return produces a corpus of roughly ₹50.5 lakh, of which only ₹18 lakh comes from your contributions. The remaining ₹32+ lakh is pure compounded return — and the longer you run the SIP, the more lopsided that ratio becomes in your favor.

SIPs combine two powerful forces. The first is rupee/dollar cost averaging: because you invest a fixed amount each month, you automatically buy more fund units when prices are low and fewer when prices are high. Over time this lowers your average cost per unit relative to lump-sum investors who happened to buy at unfavorable prices.

The second is compounding. Every month's contribution starts earning returns immediately, and those returns themselves earn returns the next month. After a decade or two, the returns earned on returns dwarf the original contributions. See our compounding frequency explainer for how this snowball effect accelerates over time.

The third (often overlooked) force is behavior. By automating the contribution, a SIP removes the temptation to time the market, skip a month when prices look high, or panic-sell when prices fall. The investors who beat the market are usually the ones who quietly kept investing through every cycle.

If you already have a large sum to invest, a lump-sum deposit typically beats a drawn-out SIP — markets rise more often than they fall, so the earlier your full balance is invested, the more time it has to compound. Historically, lump-sum has beaten dollar-cost averaging in roughly two out of three rolling periods.

SIPs win on two different axes: risk (you avoid putting your entire balance in at a market peak) and cash flow(most people are saving from a monthly paycheck and don't have a lump sum to deploy). For salaried investors building wealth from income, the SIP vs lump-sum debate is moot — you SIP because that's how the money arrives.

For a side-by-side comparison of how contributions and starting capital interact, see the Investment Growth Calculator or the main Compound Interest Calculator, both of which let you mix an initial deposit with monthly contributions.

• Constant return. The calculator assumes a flat annual return compounded monthly. Real fund returns are volatile — some years will outperform, others will be negative.
• No fees or taxes. Mutual fund expense ratios, exit loads, and capital-gains tax are not modeled. Use a return figure that already accounts for fees if you want a more conservative projection.
• No inflation adjustment.Final corpus is in today's nominal currency. To see what the future amount is worth in today's money, run it through an inflation calculator using your assumed long-run inflation rate.
• Fixed contribution. Many SIP investors step-up their contribution every year as income grows. This calculator uses a flat monthly amount; for a step-up projection, model it manually or run several scenarios.
• Past performance is not a guarantee. Mutual fund returns are subject to market risk. Read all scheme documents carefully before investing.