SIP Calculator
See what a monthly investing habit grows into — amount, tenure and expected return in, invested value, returns and total corpus out.
Year-wise growth
| Year | Invested | Value at year end |
|---|---|---|
| 1 | ₹1,80,000 | ₹1,95,317 |
| 2 | ₹3,60,000 | ₹4,22,032 |
| 3 | ₹5,40,000 | ₹6,85,192 |
| 4 | ₹7,20,000 | ₹9,90,656 |
| 5 | ₹9,00,000 | ₹13,45,225 |
| 6 | ₹10,80,000 | ₹17,56,793 |
| 7 | ₹12,60,000 | ₹22,34,522 |
| 8 | ₹14,40,000 | ₹27,89,049 |
| 9 | ₹16,20,000 | ₹34,32,717 |
| 10 | ₹18,00,000 | ₹41,79,859 |
| 11 | ₹19,80,000 | ₹50,47,107 |
| 12 | ₹21,60,000 | ₹60,53,769 |
| 13 | ₹23,40,000 | ₹72,22,257 |
| 14 | ₹25,20,000 | ₹85,78,584 |
| 15 | ₹27,00,000 | ₹1,01,52,946 |
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a disciplined investment methodology offered by mutual fund houses that allows individuals to invest a predetermined, fixed sum of money at regular intervals—typically monthly—into a selected mutual fund scheme. Instead of attempting to time market peaks and troughs with irregular lump sums, a SIP automates your wealth creation by harnessing the twin principles of rupee cost averaging and compound interest.
Over extended time horizons, consistent monthly allocations accumulate units across varying market cycles: acquiring more units during market contractions and fewer units during rallies. This automated discipline removes emotional bias from investing and turns economic volatility into a long-term compounding engine.
How the monthly compounding mechanism works
In mutual fund SIPs, compounding does not operate via guaranteed periodic interest credits as in bank deposits; rather, it manifests through the reinvestment of underlying scheme earnings and the appreciation of Net Asset Value (NAV). Each individual monthly instalment operates as a separate mini-investment that compounds for its remaining tenure.
Because mutual funds calculate unit balances dynamically, mainstream financial models and this calculator apply the standard annuity-due convention. Under this convention, every monthly deposit is credited at the beginning of the investment period and compounds continuously across the subsequent months until target redemption.
The SIP Future Value formula
FV = P × [ ( (1 + i)ⁿ − 1 ) ÷ i ] × (1 + i)
- FV — Future Value (the total projected maturity corpus)
- P — Monthly instalment amount deposited at each interval (in ₹)
- i — Periodic interest rate per compounding period (r ÷ 1200, where r is the annual expected return percentage)
- n — Total number of monthly instalments invested (Tenure in years × 12)
- (1 + i) — The annuity-due factor accounting for beginning-of-month investment timing
Worked example: Building a ₹1 Crore corpus
Consider an investor depositing ₹10,000 every month into a diversified equity fund delivering an expected long-term return of 12% per annum over an investment tenure of 20 years (240 months):
- Monthly instalment (P): ₹10,000
- Monthly return rate (i): 12 ÷ 1200 = 0.01
- Total instalments (n): 240 months
- Total capital invested: ₹10,000 × 240 = ₹24,00,000
- Estimated capital growth / wealth gained: ₹75,91,480
- Total maturity corpus (FV): ₹99,91,480 (~₹1.00 Crore)
Remarkably, the accumulated capital growth accounts for over 75.9% of the total maturity value, illustrating how prolonged time horizons amplify compound gains well beyond the initial principal invested.
SIP Growth Projections Across Tenures (at 12% p.a.)
| Monthly SIP | 5 Years | 10 Years | 15 Years | 20 Years |
|---|---|---|---|---|
| ₹5,000 | ₹4,12,432 | ₹11,61,695 | ₹25,22,880 | ₹49,95,740 |
| ₹10,000 | ₹8,24,864 | ₹23,23,391 | ₹50,45,760 | ₹99,91,480 |
| ₹15,000 | ₹12,37,296 | ₹34,85,086 | ₹75,68,640 | ₹1,49,87,220 |
| ₹25,000 | ₹20,62,160 | ₹58,08,477 | ₹1,26,14,401 | ₹2,49,78,700 |
| ₹50,000 | ₹41,24,320 | ₹1,16,16,954 | ₹2,52,28,802 | ₹4,99,57,400 |
Rupee Cost Averaging vs Market Timing
Attempting to time entry and exit points in equity markets requires predicting macroeconomic cycles, geopolitical developments, and institutional liquidity flows—an exercise where even veteran fund managers frequently falter. Systematic investing bypasses this dilemma entirely via rupee cost averaging.
When market indices correct, your fixed monthly debit purchases a higher quantity of mutual fund units at lower NAVs. Conversely, during bull runs, fewer units are bought at higher NAVs. Over multi-year horizons, this automatically drives down your average acquisition cost per unit, ensuring superior risk-adjusted internal rates of return (XIRR) without requiring cash reserves to sit idle waiting for market dips.
Taxation of Mutual Fund SIPs (Budget 2024 Updates)
Taxation on mutual fund SIP redemptions follows specific statutory rules established under the Income Tax Act, 1961, as amended by Finance (No. 2) Act, 2024:
- Equity-Oriented Funds: Units held for greater than 12 months qualify as Long-Term Capital Gains (LTCG) and are taxed at 12.5% on gains exceeding the aggregate exemption limit of ₹1,25,000 per financial year. Redemptions within 12 months qualify as Short-Term Capital Gains (STCG) and are taxed at a flat rate of 20%.
- First-In First-Out (FIFO) Rule: Because SIPs consist of staggered monthly purchases, each individual instalment has its own holding period. When partial redemptions are initiated, units purchased earliest are deemed to be sold first for capital gains computation.
- Specified Debt Mutual Funds: For mutual fund schemes investing less than 35% in domestic equities acquired on or after April 1, 2023, all capital gains are deemed short-term under Section 50AA and taxed at the investor's applicable marginal income tax slab rate, regardless of holding period.
Frequently Asked Questions on SIP Investing
Clear answers on compounding mechanics, statutory tax provisions, SIP mandates, and strategic wealth accumulation.
Most mutual fund schemes permit SIP investments starting from as low as ₹500 per month. An ideal amount depends on your monthly disposable income, existing liabilities, and targeted financial goals. A popular rule of thumb is allocating at least 20% to 30% of net monthly take-home salary toward systematic investments before budgeting discretionary expenses.
No. Mutual funds invest in market-linked equity and debt securities whose valuations fluctuate daily with market conditions. SIP calculators use an assumed annual compound return (such as 12% for equities) to project potential future values. Actual realized returns can be higher or lower depending on market cycles and fund selection.
Yes. Mutual fund SIPs offer complete liquidity and flexibility. Investors can pause or cancel a SIP mandate anytime online through their mutual fund portal or registrar (CAMS/KFintech) without any financial penalty. Units accumulated prior to cancellation remain invested and continue to compound until redeemed.
A bank RD provides guaranteed capital safety and fixed, contractual interest rates, but returns are fully taxable at your personal income tax slab rate and rarely beat real retail inflation. An equity SIP carries market risk in the short term but historically delivers inflation-beating capital growth (12%–15% p.a. over 7–10 year horizons) with preferential long-term capital gains tax rates.
Under Indian tax law, redemptions from a mutual fund account follow the FIFO principle. The units bought during your earliest SIP instalments are treated as redeemed first. For example, if you ran a SIP for 15 months and redeem 20% of your holdings, those units correspond to instalments 1 through 3, qualifying them for long-term capital gains treatment (held > 12 months).
The mutual fund asset management company (AMC) will not levy any penalty; they simply skip purchasing units for that specific monthly cycle. However, your commercial bank may levy an auto-debit / NACH bounce fee (typically ₹250 to ₹500). If debits fail consecutively for 3 months, the fund house usually deactivates the SIP mandate automatically.
Empirical backtesting across multi-decade market cycles demonstrates virtually negligible difference in long-term annualized returns between daily, weekly, and monthly SIPs. Monthly SIPs remain the standard recommendation because they synchronize naturally with monthly salary credit cycles and generate cleaner transaction statements for tax accounting.
For wealth accumulation, the Growth option is mathematically superior. In the Growth option, all profits and dividends earned by portfolio companies remain inside the fund, compounding continuously without triggering taxable events. In IDCW (Income Distribution cum Capital Withdrawal), payouts are added to your gross total income and taxed at your marginal slab rate every financial year.
Mutual fund Net Asset Values (NAVs) are published on a net basis after factoring in the scheme’s Total Expense Ratio (TER) daily. Therefore, the expected return percentage you enter into the calculator should reflect your net expected CAGR after fund expenses. Direct plans typically have 0.5%–1.0% lower expense ratios than regular plans, compounding to significantly larger corpora over 15–20 years.
Yes. Redemptions and SIP debit mandates operate independently. You can redeem any desired number of accumulated units or rupee amounts at current NAV while your monthly auto-debit continues to invest fresh instalments every month, provided your scheme is an open-ended fund with no lock-in period (unlike ELSS which has a mandatory 3-year lock-in).