SIP Calculator

How to use this calculator

1. Enter your monthly SIP amount.
2. Enter the expected return — a judgement, not a fact. See below.
3. Enter the investment period in years.
4. Optionally set an annual step-up to raise the instalment each year.

How the calculation works

A SIP instalment is paid at the start of each month, which makes it an annuity due rather than an ordinary annuity:

FV = P × [((1+i)^n − 1) / i] × (1+i)

• P — the monthly instalment
• i — the monthly rate, the annual return divided by 12
• n — the number of instalments

The trailing (1+i) is what many SIP calculators omit. Each contribution earns one extra month of returns because it goes in at the start of the period, not the end. It is a small percentage but it is the difference between matching a fund house’s projection and not.

A worked example

₹5,000 a month for 15 years at 12%.

You invest ₹5,000 × 180 = ₹9,00,000 of your own money.

Maturity value	₹25,22,880
Total invested	₹9,00,000
Returns earned	₹16,22,880
Total return	180.3%

Returns are nearly twice what you put in. That is compounding over fifteen years, and almost all of it arrives in the last third of the period.

The step-up, which is the interesting part

Most people’s salary rises every year but their SIP does not. A step-up SIP raises the instalment by a fixed percentage annually, usually matched to your increment.

Same ₹5,000 start, same 12%, same 15 years, but stepped up 10% a year:

	Flat SIP	10% step-up
Total invested	₹9,00,000	₹19,06,349
Maturity value	₹25,22,880	₹43,41,925
Final monthly SIP	₹5,000	₹20,886

You invest a little over twice as much and end with 72% more. The final instalment of ₹20,886 is worth noting — a 10% annual step-up compounds too, and by year fifteen the commitment is four times where it started. Check that against your expected income before committing.

What return should you assume?

This is a judgement, and it is the input that most affects the answer.

Indian equity indices have returned somewhere in the region of 11 to 13% a year over long periods, but with severe variation over any shorter window and no guarantee it repeats. Debt funds return considerably less with considerably less volatility.

Run 10%, 12% and 14% and plan around the pessimistic one. A plan that only works at 14% is not a plan.

And remember these are nominal returns. At 6% inflation, a 12% nominal return is about 5.7% real. The ₹25 lakh above would buy roughly what ₹10.5 lakh buys today.

Common mistakes to avoid

Stopping during a market fall. This is the single most expensive SIP mistake. A falling market means your fixed instalment buys more units — the mechanism that makes SIPs work at all. Stopping converts a temporary paper loss into a permanent one.

Judging a SIP over two years. Equity SIPs need five to seven years minimum before the return distribution becomes reasonable. Over two years you are mostly measuring luck.

Assuming a smooth 12%. No fund returns exactly 12% every year. The calculator models an average. Real sequences include multi-year drawdowns, and the order in which good and bad years arrive matters a great deal if you need to withdraw at a fixed date.

Ignoring the expense ratio. A 1% annual fee on a 12% return removes roughly a fifth of the final value over 15 years, because the fee compounds too. Enter the return net of expenses when comparing funds.

Having too many SIPs. Five funds holding largely the same stocks is not diversification, it is bookkeeping. Two or three genuinely different funds is usually plenty.

How SIP returns are taxed

Each instalment is a separate purchase with its own holding period, which makes redemption more complex than people expect.

For equity funds, units held over a year attract long-term capital gains tax with an annual exemption; units sold sooner attract short-term rates. Debt funds are taxed at slab rates regardless of holding period.

Redeeming a long-running SIP therefore mixes several tax treatments in one transaction. Most fund platforms provide a capital gains statement — use it rather than estimating.

SIP or lump sum?

Mathematically, a lump sum invested earlier usually wins, because it spends longer in the market.

SIP wins in practice for different reasons: it matches how salaries arrive, it removes the need to time an entry, and it is far easier to keep doing through a downturn. The best plan you will actually stick to beats the optimal one you abandon.

When this calculator is not the right tool

For guaranteed returns on money you need at a fixed date, use the FD or RD calculators — equity is the wrong instrument for a goal under five years. For a tax-free long-term option, compare against PPF. And to measure what an existing investment has actually returned rather than projecting forward, use the ROI calculator.