SIP Calculator

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan is a way of investing in mutual funds in regular instalments instead of all at once. You pick a monthly amount — say ₹5,000 or ₹25,000 — choose a date, and the money is debited from your bank account on that date every month and used to buy units of the mutual fund scheme you selected.

Two things make SIPs popular with first-time investors:

1. You don't need to time the market. Because you invest every month regardless of price, you automatically buy more units when prices are low and fewer when they're high. Your average purchase cost smooths out over time — this is called rupee-cost averaging.
2. Compounding does the heavy lifting. The returns on your earlier instalments themselves earn returns over the years. The longer you stay invested, the larger the share of your final corpus that comes from compounding rather than from your own contributions.

How this calculator estimates your future corpus

You enter three things: the monthly SIP amount, the duration in years, and the annual return you expect the fund to deliver. The calculator runs the standard SIP future-value formula:

Where:

• FV — the projected future value of your investment
• P — your monthly SIP amount
• i — monthly rate of return (annual rate ÷ 12, in decimal)
• n — total number of monthly instalments (years × 12)

Every time you move a slider, the calculator re-runs this formula and updates the chart, the year-by-year table, and the scenario comparison so you can see the effect immediately.

A worked example

Suppose you invest ₹10,000 every month for 15 years, and the fund delivers an average annual return of 12% (a common long-term planning assumption for Indian equity mutual funds, though not a guarantee).

• Total amount you put in over 15 years: ₹10,000 × 180 months = ₹18,00,000
• Projected corpus at the end: approximately ₹50,45,000
• Wealth gained purely from compounding: approximately ₹32,45,000 — almost 1.8× your contributions

Try the same numbers in the calculator above to see the year-by-year breakdown. Then change the duration from 15 to 25 years and watch how dramatically the gap between invested and final-value widens — that's what people mean by "long-term compounding."

When a SIP makes sense for you

SIPs work best when at least one of the following is true:

1. Your income is regular and monthly — a salaried job, a recurring retainer, a monthly rent income.
2. You're investing for a goal at least 5 years away — retirement, a child's education, a long-horizon wealth target. Equity SIPs need time to smooth out volatility.
3. You'd rather not try to time the market. Most retail investors who attempt to wait for "the right moment" end up under-invested for years.
4. You want a habit. Auto-debits force consistency in a way that manual investing rarely does.

A SIP is generally not the best fit when you have a large idle amount already, your goal is less than 12–18 months away, or you need full liquidity at all times. The Lumpsum calculator is a better starting point for the first case.

What this calculator can't tell you

The projection is a useful planning estimate, not a forecast. It assumes a constant annual return for the entire duration, which real markets never deliver. Specifically, the calculator does not account for:

• Market volatility — actual yearly returns swing between negative and well above average. The long-term average smooths this out only if you stay invested through both.
• Expense ratio — actively managed equity schemes typically charge 0.5–2.0% a year. Subtract this from the return you enter to get a more realistic projection.
• Exit load and taxes — short-term redemptions often carry a 1% exit load, and gains are taxable (see the tax section below).
• Inflation — ₹50 lakh today buys substantially more than ₹50 lakh will in 15 years. Some planners discount projected corpus by an assumed inflation rate to think in "today's rupees."

The calculator's strength is in comparison, not prediction — it lets you see how a 2% change in expected return, or a 5-year change in duration, would shift the outcome.

Tax on SIP returns

Each SIP instalment is treated as a separate purchase for tax purposes, with its own holding period starting from the date of that instalment. As per current Indian tax law:

• Equity-oriented mutual funds — long-term capital gains (units held over 12 months) are taxed at 12.5% on gains above ₹1.25 lakh per financial year. Short-term gains (held 12 months or less) are taxed at 20%.
• Debt-oriented mutual funds bought after April 2023 are taxed at your income-tax slab rate, regardless of holding period.

This calculator shows pre-tax projections. For a realistic post-tax view, especially in the redemption year, you'll need to apply the rate applicable to your scheme type and instalment dates.

SIP vs Lumpsum vs Step-Up — which is right for you?

The three calculators on PaisaMath cover the three most common ways to put money into mutual funds:

• SIP — a fixed amount every month. Best for steady monthly income and long horizons.
• Lumpsum — a one-time investment of a larger amount. Best when you have an idle corpus and a long horizon.
• Step-Up SIP — a SIP whose monthly amount grows by a fixed percentage each year. Best when you expect your income to rise and want your savings to keep pace.

Run the same goal through each calculator to see how the corpus and the total invested differ — the comparison is often more useful than picking a strategy in the abstract.