SIP Calculator

What is a SIP?

A systematic investment plan is an arrangement to invest a fixed amount into a mutual fund scheme at regular intervals — usually a fixed sum on a fixed date each month, collected by standing instruction from your bank account.

The mechanism is simple and the consequence is not. Because the amount is fixed rather than the number of units, each instalment buys however many units that day's net asset value allows. When prices are low the same money buys more units; when prices are high it buys fewer. Over many instalments this averages your entry price across whatever the market did, which is sometimes called rupee cost averaging.

Two things follow that are worth being precise about. A SIP is not an asset class, a product or a scheme — it is a method of investing into one, and the underlying fund determines the risk and the outcome entirely. And averaging your entry price reduces the impact of any single day's price; it does not reduce the risk of the underlying investment, and it does not protect against a market that falls and stays down.

What is a SIP calculator?

A SIP calculator projects what a series of regular investments might grow to if they earned a particular rate of return. You supply the instalment, the period and the return; it applies compound growth to each instalment for however long that instalment stays invested, and sums the result.

What it is genuinely good for is comparison. How much difference does five more years make? What would raising the instalment by ₹2,000 do? What would happen if the return came in at 8% rather than 12%? Those questions have precise arithmetic answers, and seeing them side by side is far more useful than any single projection.

What it cannot do is predict. The return is an assumption you chose, not information the calculator has. Feeding in 12% and reading out a corpus does not make that corpus likely — it tells you what 12% would produce, which is a different and much weaker statement.

How a SIP calculator works

Each instalment is treated as a separate investment that compounds for the time remaining until the end of the period. The first instalment in a ten-year monthly SIP compounds for 120 months. The second compounds for 119. The last compounds for one. The projected corpus is the sum of all 120 of those individually-compounded amounts.

Because that sum has a closed form — the annuity formula — a calculator does not need to loop through every month. This one does anyway, for two reasons: a step-up SIP has no clean closed form, and running the schedule period by period produces the year-by-year table as a by-product. The test suite checks the simulation reproduces the closed form exactly when there is no step-up, so the shortcut and the long way agree.

The consequence of instalments compounding for different lengths of time is the shape of the curve. It is not a straight line and it is not a smooth exponential either — it bends upward as the earlier instalments accumulate growth on growth while later ones are still barely started.

How SIP returns are calculated

Estimated returns are the projected value minus what you actually contributed. There is nothing more to it: if you put in ₹12,00,000 and the projection is ₹23,23,391, the estimated returns are ₹11,23,391.

The wealth gain figure expresses that as a percentage of what you invested — 93.6% in this example. It is a useful summary but it is not an annual return, and reading it as one is a common error. Ninety-four per cent over ten years is not 9.4% a year; the money went in gradually, so most of it was invested for far less than ten years.

That is also why you cannot compute a SIP's annualised return by dividing. The right tool for a real SIP with real dates is XIRR, which is discussed below.

SIP and compounding

Compounding is often described as returns earning returns, which is accurate but not very illuminating. What matters practically is that its effect is wildly non-linear in time and merely linear in amount.

Double the instalment and the projection doubles — exactly, because the formula is linear in P. Double the period and the projection more than quadruples. On the figures above, ₹10,000 a month for 10 years projects to ₹23.2 lakh, and for 20 years to ₹99.9 lakh. You contributed twice as much and the projection grew more than four times.

The clearest single indicator is the crossover point — the year in which the projected returns first exceed the total contributed. The chart above marks it for whatever you entered. At an assumed 12% on a monthly SIP it lands somewhere around year eleven; before that you are mostly looking at your own money, and after it you are mostly looking at growth. Everything people say about starting early reduces to moving that crossover inside your investing lifetime rather than beyond it.

SIP versus lump sum

Under a constant assumed return, a lump sum always projects higher than the same total spread as a SIP. This is not a finding; it is arithmetic. The lump sum is invested for the full period while the SIP's later instalments are invested for months, so the lump sum simply has more time working on more money.

The calculator's comparison mode shows this honestly and says so in the panel, because presenting it as evidence that lump-sum investing is superior would be misleading in three ways.

First, it assumes you have the money now. Most people investing monthly are investing from monthly income; the comparison is hypothetical for them.

Second, it assumes a constant return. Real markets deliver returns unevenly, and a lump sum invested immediately before a sustained fall performs very differently from the same amount spread over the following two years. A SIP spreads entry across many prices; that reduces the influence of any single entry point, which is a genuine benefit the constant-return model cannot represent.

Third, it ignores behaviour. A large single investment that falls 25% shortly afterwards causes people to sell. A SIP that falls 25% buys more units at the lower price and requires no decision at all. The strategy you will actually stick to matters more than the one that projects marginally higher in a spreadsheet.

What is a step-up SIP?

A step-up SIP — sometimes called a top-up SIP — raises the instalment by a set percentage each year. Starting at ₹10,000 with a 10% annual step-up means ₹11,000 in year two, ₹12,100 in year three, ₹13,310 in year four, and so on.

The logic is that income tends to rise over a career while a fixed SIP does not, so a static instalment represents a shrinking share of what you earn each year. Stepping up keeps the commitment roughly proportional.

In this calculator the increase applies at the start of each new year, so the first twelve instalments run at your starting amount. Over a twenty-year plan that means nineteen increases, and a ₹10,000 starting instalment finishes at roughly ₹61,159 a month.

How much does a step-up actually add?

A great deal, and it is important to see where it comes from. Take ₹10,000 a month for 20 years at an assumed 12%. Without a step-up you contribute ₹24,00,000 and the projection is about ₹99,91,479. With a 10% annual step-up you contribute ₹68,73,000 and the projection is about ₹1,98,88,715.

The projected corpus roughly doubles — but so does the contribution, nearly threefold. The step-up is not a return-enhancing mechanism; it is mostly you investing more of your own money. What the compounding adds is that the extra contributions still have years to grow, so the projection rises by more than the extra contribution alone.

This is exactly why the calculator shows total invested and estimated returns separately for both scenarios rather than only the headline corpus. A comparison that showed only the final figures would imply the step-up did something clever, when most of what it did was save more.

Goal-based SIP planning

The target mode runs the calculation backwards: you supply a corpus, a period and an assumed return, and it solves for the instalment that reaches it.

Without a step-up the inversion is closed-form — the annuity formula rearranged. With a step-up there is no clean inverse, so the calculator finds the starting instalment by narrowing in on it numerically against the same simulation that produces the projection. That means the answer is always consistent with the schedule it will be shown alongside, rather than being an approximation from a different formula.

The mode is most useful for testing feasibility. Wanting ₹1 crore in ten years is a different proposition from wanting it in twenty: roughly ₹43,000 a month versus roughly ₹10,000, on the same assumed return. Seeing that gap is usually more informative than the number itself, because it turns "how much do I need" into "which of these is actually possible for me".

How inflation affects a SIP

A projection of ₹1 crore in twenty years is a nominal figure — one crore of rupees, not one crore of today's purchasing power. Inflation makes those different things, and over long horizons the gap is enormous.

Dividing the projection by (1 + inflation)^years converts it into today's money. At 6% inflation, ₹1 crore in twenty years is worth roughly ₹31 lakh today. The corpus has not shrunk; what it buys has.

This matters most for goals defined in real terms. A retirement corpus, an education fund and a house deposit are all really targets for a certain amount of buying, and setting them in today's rupees without adjusting for two decades of inflation systematically understates what is needed. Enter an inflation assumption and the calculator shows both figures, so the nominal projection and its purchasing power are never confused.

Real return is not nominal minus inflation

The common shortcut — 12% return minus 6% inflation is 6% real — is wrong, though not by much at small numbers. The correct relation divides rather than subtracts:

Real return = ((1 + nominal) ÷ (1 + inflation)) − 1

At 12% and 6% that gives 5.66%, not 6%. The error is small here and grows with the numbers: at 30% nominal and 15% inflation the shortcut says 15% while the correct figure is 13.04%. This calculator uses the correct relation, and labels the result an estimated real return rather than a fact.

CAGR, XIRR and what a SIP calculator actually gives you

Three different measures get confused constantly, and the distinction is worth holding onto.

CAGR — compound annual growth rate — is the constant annual rate that would take a single amount from its starting value to its ending value. It suits a lump sum with one entry and one exit. It does not describe a SIP, because a SIP has many entries on many dates and no single "starting value" to compound from.

XIRR is the annualised rate that makes a series of dated cash flows balance. It is the right measure for a real SIP once you have actual transaction data — every instalment with its date, plus the current value. It is a measurement of what happened, not a projection.

What this calculator produces is neither. It is a forward projection: apply one assumed constant rate to a fixed schedule and see what comes out. It is not a CAGR, and it deliberately does not display an XIRR, because computing one would require real dated transactions that a forward-looking calculator does not have. A tool showing you an XIRR figure derived from an assumption is showing you something that does not mean what the label says.

What this calculator does not include

Being explicit about the boundary is more useful than implying completeness.

• Expense ratio. Funds charge an annual percentage that reduces returns. Not deducted here — if you want an allowance, enter a return already net of it.
• Exit load. Some schemes charge a fee for redeeming within a defined period. Not modelled.
• Taxes. Capital gains on redemption depend on fund type, holding period and rules that change. The projection is pre-tax.
• Stamp duty and transaction costs. Small, but real, and not applied.
• NAV variation. The model assumes one constant rate. Real unit prices move daily, and the sequence of those moves changes the outcome even at an identical average.
• Missed or irregular instalments. The schedule is assumed perfect.
• Dividend or IDCW payouts. Growth-option accumulation is assumed throughout.

None of these make the calculator useless — they make it a model. Models are for comparing scenarios, which this one does precisely, not for predicting outcomes, which nothing does.

Common mistakes in SIP planning

Treating the projection as a plan. A single figure at a single assumed rate is one scenario. Run it at several rates and treat the range as the answer.

Assuming a return because a calculator defaulted to it. The 12% that appears in most SIP calculators, including this one, is a convention, not a forecast. Nothing about it is a promise.

Reading wealth gain as an annual return. A 93.6% gain over ten years on a SIP is not 9.4% a year, because most of the money was invested for far less than ten years.

Ignoring inflation on long horizons. A twenty-year nominal target set in today's rupees is systematically too small.

Confusing a step-up's contribution with its returns. Most of a step-up's larger corpus is simply more money invested.

Stopping during a fall. The instalments made when prices are low buy the most units. Pausing a SIP in a downturn removes precisely the instalments the averaging argument depends on.

Comparing calculators without checking the convention. Start-of-period and end-of-period assumptions differ by about one period's growth. Two correct calculators can disagree by a per cent for this reason alone.

Planning around the exact rupee. The projection has a spurious precision. ₹23,23,391 is arithmetically exact and practically meaningless to the last digit — the honest reading is "somewhere in the low twenty-lakhs, if the assumption holds".

Expected return versus actual return

The single largest source of error in any SIP projection is not the arithmetic — it is the assumed return, and it is entirely outside the calculator's control.

Two things make it harder than picking a plausible number. Actual returns vary year to year rather than arriving as a constant, and the sequence matters: two periods with the same average annual return produce different SIP outcomes depending on whether the weak years came early or late, because contributions are spread across time rather than made all at once. A model with one flat rate cannot represent that at all.

The practical response is not to find a better single number but to stop relying on one. Run the projection at a pessimistic rate, a central one and an optimistic one, and plan against the pessimistic figure. If a goal only works at 15%, it is not a plan.

Tax considerations

This calculator produces pre-tax projections and does not model tax at all, but a few structural points are worth knowing when interpreting the output.

Each SIP instalment is a separate purchase with its own date, so on redemption each is assessed on its own holding period. A SIP running for years will contain units of many different ages when you sell, which is why redeeming a SIP is not a single tax event with a single holding period.

Beyond that, treatment depends on the fund category, the holding period and rules that are revised periodically — which is exactly why nothing here estimates it. If tax materially affects your decision, take the specific numbers to a qualified professional rather than to any calculator.

Privacy

Every calculation on this page runs in your browser. There is no server involved and no request is made — the amounts, targets and assumptions you enter never leave your device.

Nothing is stored either, unless you switch on the optional history. That writes to your own browser's local storage and can be cleared at any time; turning it off deletes the entries immediately.