What is the SIP Calculator?
A systematic investment plan puts a fixed sum into a fund at a fixed interval, usually monthly. Its appeal is not that it produces better returns than investing a lump sum — over long rising periods it often does not — but that it removes the need to decide when to invest, which is the decision most people get wrong.
This calculator projects what a monthly contribution could grow to over a chosen period at an assumed rate of return. The result is a projection built on an assumption, not a forecast: market returns are not delivered in smooth annual instalments.
What each input means
- Monthly investment
- The amount contributed each month. Choose a figure you can sustain through a bad year, since stopping during a downturn is what usually undoes a plan.
- Expected annual return
- Your assumption about long-run average return. Be conservative — this input drives the result more than any other.
- Investment period
- How long contributions continue. Time is what allows compounding to do the heavy lifting.
- Annual step-up
- An optional yearly rise in the instalment. Leave it at 0 for a flat SIP.
How this calculation works
Each contribution is treated as invested at the start of its month and compounded at the assumed rate for however long it remains invested. Your first contribution compounds for the full term; your last compounds for barely a month. The projection is the sum of all those individual growth paths.
This structure explains why the final years of a long SIP add so much. By then the accumulated balance is large, and growth on that balance dwarfs the new money going in. It also explains why starting earlier matters far more than contributing more later.
Formula: Future value = M × [((1+r)ⁿ − 1) ÷ r] × (1+r)
Getting the most out of the result
- Test a pessimistic return alongside your preferred one. Seeing the range is more useful than seeing a single number.
- Increase the contribution as your income rises. A SIP fixed at the same amount for a decade loses ground to inflation.
- Judge the result in today's money. A large future figure buys considerably less than the same amount buys now.
- Automate the transfer so investing happens before spending rather than out of what happens to be left.
- Continuing through market falls is the point of the method — those contributions buy more units, and they are the ones that tend to matter most.
Common mistakes to avoid
The most consequential error is entering an optimistic return and treating the output as a plan. A few percentage points of difference compound into an enormous gap over twenty years, and a plan built on the optimistic figure falls well short. Investors also stop contributing when markets fall, which removes exactly the contributions that would have bought most cheaply. Others compare a projection with the fund's recent past performance and are disappointed, forgetting that the projection assumes a smooth average no real fund delivers. Fees and taxes, both excluded here, further reduce what actually arrives.
Frequently asked questions
What return should I assume?
There is no correct answer, only a defensible one. Use a figure grounded in long-run averages for the asset class rather than recent performance, and run a lower scenario alongside it. A projection built on an optimistic assumption is not a plan.
Is a SIP better than investing a lump sum?
Historically, in consistently rising markets, a lump sum invested early often finishes ahead. A SIP wins on behaviour: it removes timing decisions, matches how salaries arrive, and is far easier to sustain. For most people that practical advantage outweighs the theoretical one.
What happens if I miss a contribution?
Nothing punitive with most funds — you simply have less invested and slightly less growth. The real cost is behavioural: a missed month often becomes a stopped plan.
Can I withdraw before the period ends?
With open-ended funds, generally yes, though exit loads may apply within a short holding window and tax treatment depends on how long units were held. Schemes with a statutory lock-in are different, so check before assuming access.
Does this include fees and taxes?
No. Fund expenses reduce returns each year, and tax may apply on gains at redemption. Both mean your actual outcome will be below the projection here.
Should I increase my SIP over time?
If your income allows it, yes. A contribution held flat for years loses purchasing power. The step-up SIP calculator shows what a regular annual increase does to the final figure.
Why does the projection assume a steady return?
Because modelling actual market volatility would require assumptions about sequence and timing that nobody can supply. A smooth average is a reasonable planning tool, provided you remember real returns arrive unevenly.
How long should a SIP run?
Long enough for compounding to dominate contributions, which generally means several years at minimum. Equity-oriented investing in particular needs time to ride out periods of poor performance.
Guides that go deeper
- SIP vs FD: Choosing a Home for Your Savings
- A Calm, Useful Personal Finance Checklist
- Prepay Your Home Loan or Invest the Money?