How a SIP grows your money
A Systematic Investment Plan (SIP) lets you invest a fixed amount into a mutual fund every month. Because each instalment earns returns that are then reinvested, your money compounds over time. This calculator uses the future-value-of-an-annuity formula: FV = P ร [((1+i)โฟ โ 1) / i] ร (1+i), where P is your monthly amount, i is the monthly rate, and n is the number of months.
Why SIPs are popular
SIPs encourage disciplined, regular investing and average out market ups and downs โ a concept called rupee-cost averaging. Small monthly amounts can grow substantially over 10โ20 years thanks to compounding.
Important note
Mutual fund returns are not guaranteed and depend on market performance. The figure here is an estimate based on a constant assumed rate; actual returns will vary year to year.
Frequently asked questions
What is a SIP?
A Systematic Investment Plan lets you invest a fixed amount in a mutual fund at regular intervals, usually monthly, building wealth gradually through compounding.
How are SIP returns calculated?
Using the future value of an annuity: FV = P ร [((1+i)^n โ 1) / i] ร (1+i), where P is the monthly amount, i the monthly return and n the number of months.
Are SIP returns guaranteed?
No. Returns depend on market performance. This calculator gives an estimate based on an assumed constant rate.
What return rate should I assume?
Equity mutual funds have historically returned around 10โ14% per year over the long term, but past performance does not guarantee future results.