What is a SIP?

A Systematic Investment Plan, or SIP, is a way of investing in mutual funds where you put in a fixed amount every month instead of a large sum at once. You can start with as little as ₹500 a month. Because the money goes in regularly, you buy more units when the market is down and fewer when it is up, which averages out your purchase cost over time and sits at the heart of the SIP versus lumpsum trade-off.

This is how most Indian retail investors build wealth in equity funds. The habit matters as much as the maths: a SIP turns investing into something that happens automatically every month, the same way your salary arrives.

How Does the SIP Calculator Work?

The calculator uses the standard future value formula for monthly investments:

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

Here, P is the amount you invest every month, i is the monthly rate of return (the yearly return divided by 12), and n is the total number of instalments. You do not need to work any of this out yourself. Enter your monthly amount, the expected yearly return and the number of years, and the calculator shows your invested amount, the estimated returns and the final value.

Let us take an example. Suppose you invest ₹10,000 every month for 10 years and expect a 12% yearly return. You would invest ₹12 lakh in total, and the corpus would grow to about ₹23.2 lakh. That is ₹11.2 lakh of wealth gained. Now stretch the same SIP to 20 years: the corpus reaches about ₹99 lakh from ₹24 lakh invested. Doubling the time nearly quadruples the result, because your earliest instalments get the most years to compound. This is why starting early matters more than starting big.

What Return Should You Assume?

The return you enter is an assumption, not a promise. Indian equity funds have historically delivered returns in the low teens over long periods, but those returns arrive unevenly, and some years are strongly negative. A sensible approach is to run the calculator at 10%, 12% and 14% and treat that range as your planning picture.

How Are SIP Returns Taxed?

Every monthly instalment buys units with their own purchase date, and tax is worked out unit by unit when you sell. For equity funds, units held for more than 12 months are long-term and currently taxed at 12.5% on gains above ₹1.25 lakh a year. Units held for less than 12 months are short-term and taxed at 20%. This means that even in an old SIP, your most recent instalments can still be short-term when you withdraw. Gains from debt-fund SIPs are generally taxed at your income slab.

Common Mistakes to Avoid

Three habits quietly damage SIP results. The first is stopping the SIP when the market falls, which is exactly when your instalments buy the cheapest units. The second is planning around the best year you have seen instead of a conservative long-run rate. The third is never raising the amount: if your salary grows 8% a year but your SIP stays the same, your savings rate falls every year. A step-up SIP fixes that by raising the instalment automatically every year. You can also compare a one-time investment with the lumpsum calculator, and measure what an existing SIP has actually earned with the XIRR calculator.

Mutual fund investments are subject to market risks. Read all scheme related documents carefully. This calculator is an educational tool, not investment advice.

FAQs about SIP Calculator

Each monthly instalment compounds from its own date using the future-value-of-annuity formula: FV = P × [((1+i)ⁿ − 1) ÷ i] × (1+i), where i is the monthly rate and n the number of instalments.
Neither is universally better. A lumpsum invested early captures more compounding if markets rise, while a SIP spreads risk across time and suits people investing from a monthly salary. Most salaried investors use SIPs simply because that is how their money arrives.
For equity funds, a long-term planning range of 10–12% a year is common; guaranteed numbers do not exist. Actual returns vary widely year to year — past performance is not indicative of future results.
Yes. SIPs are flexible — you can increase, pause or stop them anytime without penalty from the fund (exit loads and taxes may apply when you redeem units).
Per instalment: equity-fund units held over 12 months are long-term (currently 12.5% above the ₹1.25 lakh annual exemption); units under 12 months are short-term at 20%. Debt-fund gains are generally taxed at your slab rate. Tax applies only when you redeem.
Nothing serious — the fund simply does not buy units that month. Your bank may charge a small mandate-bounce fee, and after several consecutive failures the SIP mandate may be cancelled, but there is no penalty from the mutual fund and existing units are unaffected.