SIP Growth Calculator
How to Use This SIP Calculator
Planning your financial future shouldn’t be complicated. Our SIP Growth Calculator is designed to give you an instant snapshot of your potential wealth creation. Follow these three simple steps to estimate your returns:
- Set Your Monthly Investment: Use the slider or type in the exact amount you plan to invest in a mutual fund scheme every month.
- Adjust Expected Return: Enter the expected annual interest rate. While mutual funds are subject to market risks, equity funds historically range between 12% to 15% over the long term.
- Choose Time Period: Select the number of years you intend to stay invested. Remember, the longer you invest, the more powerful the compounding effect becomes.
How Does a Systematic Investment Plan (SIP) Work?
A Systematic Investment Plan (SIP) is a disciplined approach to investing. Rather than trying to time the market—which is risky and difficult even for experts—a SIP allows you to invest a fixed sum regularly (usually monthly). This strategy leverages two powerful financial concepts: Rupee Cost Averaging and Compound Interest.
1. The Magic of Compound Interest
Albert Einstein famously called compound interest the “eighth wonder of the world.” In the context of SIPs, compounding means that you earn returns not just on your principal investment, but also on the returns generated by that investment over time.
For example: If you invest ₹5,000 monthly for 5 years, your growth is modest. But if you continue that same investment for 20 years, the interest earned usually exceeds the amount you actually invested. This is the key to Long-term Wealth Creation.
2. Rupee Cost Averaging
Markets fluctuate. When the market is down, your fixed monthly amount buys more units of a mutual fund. When the market is up, you buy fewer units. Over time, the cost per unit averages out, often lowering your overall cost of acquisition. This protects you from the volatility of lump-sum investments.
The Math Behind the Calculator
While our tool does the heavy lifting instantly, the logic relies on the future value of an annuity formula. The specific formula used for monthly SIP calculation is:
Where:
- M = Estimated Maturity Amount
- P = Monthly Investment Amount
- i = Periodic Interest Rate (Annual Rate / 12 / 100)
- n = Total Number of Payments (Years × 12)
By using this calculator, you can visualize how small increases in your investment amount or tenure can drastically impact your final corpus, helping you plan for goals like retirement, education, or buying a home.
Frequently Asked Questions
You can start a SIP with as little as ₹500 per month. This low barrier to entry is one of the biggest advantages of mutual funds, making wealth creation accessible to students, young professionals, and first-time investors.
In a volatile market, SIP is generally considered safer than a lumpsum investment. SIPs benefit from “Rupee Cost Averaging,” meaning you buy more units when the market is low and fewer when it’s high. Lumpsum investments are better suited when the market has bottomed out or if you have a large disposable amount to invest for a very long horizon.
Yes, most mutual fund houses allow you to increase or decrease your SIP amount. You can also pause your SIP for a few months if you face a financial crunch, or use a “Step-up SIP” to automatically increase your investment amount by a fixed percentage every year.
Yes, returns are subject to capital gains tax. For Equity Mutual Funds, gains withdrawn before 1 year are taxed at 20% (Short Term Capital Gains). Gains withdrawn after 1 year are taxed at 12.5% only if the profit exceeds ₹1.25 Lakh in a financial year (Long Term Capital Gains).
No. This calculator provides an estimate based on the expected rate of return you enter. Mutual fund investments are subject to market risks, and actual returns may vary based on market performance, fund management, and economic conditions.