SIP Calculator: How Systematic Investment Plans Build Wealth Over Time
Understand how SIP returns are calculated, the power of rupee cost averaging, and how to plan your SIP amount to reach your financial goals.
What Is a SIP?
A Systematic Investment Plan (SIP) is a method of investing a fixed amount at regular intervals (monthly or quarterly) in mutual funds. Rather than trying to time the market with a lump sum investment, SIP lets you invest consistently and benefit from rupee cost averaging.
SIP Returns Formula
FV = P × [(1+r)^n − 1] / r × (1+r)
Where FV = Future Value, P = Monthly SIP amount, r = Monthly return rate (Annual rate ÷ 12 ÷ 100), n = Number of months
Power of SIP: Real Numbers
Monthly SIP of ₹10,000 at 12% annual return:
| Duration | Total Invested | Estimated Returns | Corpus |
|---|---|---|---|
| 5 years | ₹6.00 lakh | ₹2.12 lakh | ₹8.12 lakh |
| 10 years | ₹12.00 lakh | ₹11.23 lakh | ₹23.23 lakh |
| 15 years | ₹18.00 lakh | ₹32.24 lakh | ₹50.24 lakh |
| 20 years | ₹24.00 lakh | ₹75.91 lakh | ₹99.91 lakh |
| 25 years | ₹30.00 lakh | ₹1.62 crore | ₹1.92 crore |
Rupee Cost Averaging
One of SIP's greatest advantages: you buy more units when prices are low and fewer when prices are high, automatically. Over time, your average cost per unit is lower than the average market price — you benefit even in volatile markets.
Example: You invest ₹1,000/month in a fund:
- Month 1: NAV ₹10 → buy 100 units
- Month 2: NAV ₹8 → buy 125 units
- Month 3: NAV ₹12 → buy 83.3 units
- Average NAV = ₹10, but your average cost = ₹3,000/308.3 units = ₹9.73/unit
Step-Up SIP: Increase Investment as Income Grows
A Step-Up SIP increases your monthly investment by a fixed percentage each year. If you start at ₹10,000 and increase by 10% annually at 12% return for 20 years, your corpus grows to approximately ₹2.06 crore vs. ₹99.91 lakh for a flat ₹10,000/month SIP.
How to Choose the Right SIP Amount
Work backwards from your financial goal. Use our SIP Calculator to find the monthly investment needed for a target corpus.
Example: Need ₹1 crore in 15 years at 12% return:
Required monthly SIP ≈ ₹19,892/month
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