SIP Calculator

What is a SIP?

A Systematic Investment Plan is the boring way to get rich in mutual funds. You pick a fund, set a monthly amount, link your bank, and forget about it. On a fixed date each month the AMC pulls the money via NACH mandate and buys units at that day's NAV. Twenty years later you have a corpus. No timing, no panic, no smart-sounding theses about why this is or isn't the bottom.

The marketing makes SIPs sound magical. The math behind them is just compounding plus a small bonus from rupee-cost averaging. If markets are perfectly flat, a SIP and a lumpsum that adds up to the same total end up with similar numbers. Where the SIP wins is in markets that fall and recover, which is what Indian equity actually does on most multi-year horizons. You end up buying more units when the Nifty is at 16,000 and fewer when it's at 24,000, and your average cost per unit comes out lower than the simple-mean price.

The other reason SIPs work is behavioural. They remove the decision of when to invest, which is the single most expensive decision retail investors get wrong. Most people who try to time entries end up sitting in cash through long bull runs and buying right before corrections. A SIP just keeps going.

How the SIP future value is calculated

The closed-form expression is the future value of an annuity, with one extra (1+r) factor because most SIPs are debited at the start of the month (annuity-due, not annuity-immediate):

FV = M × [((1+r)^n − 1) / r] × (1+r)

Where:

• M is the monthly investment
• r is the monthly rate of return, calculated as (annual rate ÷ 12) ÷ 100
• n is the total number of months (years × 12)

You can derive this from first principles. The first installment compounds for n months, the second for n-1 months, and so on. Summing the geometric series gives the bracket above. Multiplying by (1+r) shifts every installment one month earlier, which matches the AMC's beginning-of-month convention.

One caveat. This formula assumes a smooth constant monthly rate, which markets never give. Reality is closer to -2% one month, +5% the next, -8% the month after. The XIRR your broker shows is computed on real cashflow dates and real NAV history, and will differ from the calculator output even if your fund matches the assumed return on average.

Worked example

You invest ₹10,000 a month into an index fund tracking the Nifty 50 for 15 years. Plug in 12% expected annual return, which is roughly the 20-year Nifty TRI CAGR.

r is 0.01 (that's 12 ÷ 12 ÷ 100). n is 180. M is 10,000. The calculator returns roughly ₹50.46 lakh. Out of this, ₹18 lakh is your money (₹10,000 × 180) and ₹32.46 lakh is growth. Returns alone are larger than the total invested, which is the whole point of long-horizon SIPs.

Push the horizon to 25 years instead of 15. Now FV is around ₹1.9 Cr against ₹30 lakh invested. The extra 10 years of compounding turns ₹12 lakh of additional contribution into about ₹1.4 Cr of extra corpus. The arithmetic gets uncomfortable to ignore once you see it.

Now apply a 10% annual step-up on the ₹10,000 SIP for 25 years. The first year is ₹10,000/month, year two is ₹11,000, year three is ₹12,100, and so on. By year 25 the monthly SIP is roughly ₹98,500. Total invested rises to about ₹1.18 Cr, but the corpus climbs near ₹3.4 Cr at the same 12%. Step-up is a hidden cheat code most people skip because it isn't the default option on broker apps.

Common mistakes to avoid

The single most expensive mistake is killing the SIP during a market crash. Rupee-cost averaging only works if you buy more units when prices are low, and the only way that happens is to keep the auto-debit running. Every long-horizon Indian equity investor who panicked in March 2020 and stopped gave up the cheapest 6-12 months of unit accumulation in a decade. Set the SIP, ignore the headlines, glance at the portfolio once a year.

Second mistake, almost as common: picking the fund off last year's chart-topper list. The 40% fund from last year almost never repeats. Simple play is direct plans of large AMCs with consistent 10-year records (HDFC, ICICI Prudential, SBI, Mirae, Axis, Parag Parikh, Nippon, Kotak, UTI), ideally one large-cap or index fund as the core and one flexi-cap as the satellite. Eight different small-cap funds is not diversification, it's just overlap dressed up as choice.

Don't treat the 12% expected return as a guarantee. It's a long-term average across decades. Any individual 5-year window can deliver anywhere from -5% to 25% per year. If the SIP funds a non-negotiable goal that lands in less than 7 years, equity is the wrong instrument; use a debt or hybrid fund and accept the lower expected return in exchange for less downside near goal date. For the truly fixed-return slice of your savings, run the same horizon through the FD calculator or the PPF calculator to see what the guaranteed alternative looks like.

The expense-ratio gap looks small on paper until you compound it. A regular plan at 1.2% versus a direct plan at 0.4% sounds like nothing, until 25 years later the regular-plan corpus is roughly 15-20% smaller. Open accounts directly with the AMC, or use a flat-fee direct platform like Coin, MF Central or Kuvera. The bank's relationship manager who happily sets up your SIP is paid out of the higher expense ratio on the regular plan, which is your money.

Last trap is tax. Each installment is a separate purchase for FIFO, so when you redeem a chunk after 5 years only some of those units cross the 1-year threshold cleanly. The post-budget 2024 LTCG rate of 12.5% above ₹1.25 lakh per FY for equity funds is friendlier than it used to be, but the slab-rate hit on debt funds bought after 1-April-2023 catches people off guard. Plan redemptions in advance, not on the day you need the money.