How the SIP calculator works
Enter three things: the amount you plan to invest every month, the number of years you intend to stay invested, and the annual return you want to assume. The calculator converts the annual rate into a monthly rate, treats each instalment as invested at the start of the month, and compounds every instalment for the months it remains invested. The chart splits the final amount into what you put in (invested amount) and what the assumed growth added (estimated gains).
Switch to Lumpsum to see how a one-time investment compounds annually, or to Lumpsum + SIP to model a starting corpus topped up by monthly instalments — the typical situation when you move an existing bank balance into mutual funds and continue investing from salary.
Because the calculation uses a single flat rate, it cannot reflect market ups and downs, exit loads, expense ratios or taxes. Treat the output as a planning estimate, not a projection of any specific scheme.
SIP formula with variable key
The calculator uses the future value of an annuity due — the standard formula used by AMFI and most fund houses for SIP illustrations.
Formula
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
- Where:
- FV
- = future value (estimated corpus at the end of the period)
- P
- = monthly SIP amount in rupees
- r
- = monthly rate of return = annual return ÷ 12 ÷ 100
- n
- = total number of monthly instalments = years × 12
For a lumpsum the formula is simpler: FV = A × (1 + R)^t, where A is the one-time amount, R the annual return (as a decimal) and t the number of years.
Worked example in rupees
Suppose you start a SIP of ₹5,000 per month, assume 12% per annum, and continue for 10 years.
- Monthly rate r = 12 ÷ 12 ÷ 100 = 0.01
- Number of instalments n = 10 × 12 = 120
- (1.01)^120 ≈ 3.3004, so [((1.01)^120 − 1) / 0.01] × 1.01 ≈ 232.34
- FV ≈ ₹5,000 × 232.34 ≈ ₹11,61,695
- Amount invested = ₹5,000 × 120 = ₹6,00,000; estimated gains ≈ ₹5,61,695
Roughly half of the final amount in this illustration comes from growth rather than from your own instalments — and the share of growth rises sharply with time, which is why the same SIP over 20 years produces far more than double the 10-year figure.
This illustration assumes a constant 12% a year, assumed for this example; it is not a forecast. For reference, AMFI Best Practices Circular No. 109/2023-24 prescribes 12.93% for equity-fund illustrations: the mean of 10-year rolling returns of the Nifty 50 between 01/06/2013 and 30/05/2023 (Sensex 12.64%, 10-year G-Sec 7.20%). Calculators accept rates up to 13%.
Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Comparison: what ₹5,000 a month could become
| Duration | Amount invested | Estimated value | Estimated gains |
|---|---|---|---|
| 10 years | ₹6,00,000 | ₹11,61,695 | ₹5,61,695 |
| 15 years | ₹9,00,000 | ₹25,22,880 | ₹16,22,880 |
| 20 years | ₹12,00,000 | ₹49,95,740 | ₹37,95,740 |
| 25 years | ₹15,00,000 | ₹94,88,175 | ₹79,88,175 |
The rate you assume matters too. The same ₹5,000 SIP for 10 years gives about ₹9.21 lakh at 8%, ₹10.33 lakh at 10% and ₹12.28 lakh at 12.93%, the rate AMFI prescribes for equity-fund illustrations. Use a conservative rate for goals you cannot postpone.
This illustration assumes constant rates of 12%, 8%, 10%, 12.93% a year, assumed for this example; it is not a forecast. For reference, AMFI Best Practices Circular No. 109/2023-24 prescribes 12.93% for equity-fund illustrations: the mean of 10-year rolling returns of the Nifty 50 between 01/06/2013 and 30/05/2023 (Sensex 12.64%, 10-year G-Sec 7.20%). Calculators accept rates up to 13%.
Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Common mistakes when using a SIP calculator
- Assuming a high return: AMFI prescribes 12.93% for equity-fund illustrations and these calculators accept at most 13%, but no return is promised. Run the numbers at 8–10% as well.
- Ignoring inflation: ₹50 lakh in 20 years buys far less than ₹50 lakh today. Use the Goal SIP calculator to inflate the target first.
- Forgetting the time you need: short goals (under 3 years) are usually not suited to equity SIPs; debt or hybrid categories may be more appropriate.
- Stopping the SIP in a downturn: instalments made when prices are low buy more units — that is exactly how rupee-cost averaging works.
- Not stepping up: raising the SIP with each salary hike has a bigger effect than most people expect. Try the Step-up SIP calculator.
- Treating the estimate as tax-free: equity fund gains are taxed on redemption (see below).
Tax implications of SIP investments
Each SIP instalment is a separate purchase with its own holding period. When you redeem, units are matched on a first-in, first-out basis. For equity-oriented funds, gains on units held for more than 12 months are long-term capital gains, taxed at 12.5% on the portion above ₹1.25 lakh in a financial year; gains on units held for 12 months or less are short-term and taxed at a higher rate — check the current rate before you redeem. Debt-fund taxation follows different rules; check the current treatment for the category you hold.
ELSS (tax-saving) funds offer a Section 80C deduction under the old tax regime only, with a three-year lock-in that applies to every instalment separately. Under the new regime, which is now the default, no 80C deduction is available, so choose ELSS for its equity exposure rather than for the tax break alone.
Frequently asked questions
What is a SIP?
A Systematic Investment Plan is a facility that lets you invest a fixed sum in a mutual fund scheme at a regular interval — usually monthly — through an auto-debit mandate. It is a way of investing, not a product; the return depends on the scheme you choose.
How is SIP return calculated?
Calculators use the future value of an annuity due: FV = P × [((1 + r)^n − 1) / r] × (1 + r), where P is the monthly amount, r the monthly rate and n the number of instalments. Actual returns are usually reported as XIRR, which accounts for the exact date of each instalment.
What is the minimum amount for a SIP?
Most schemes accept small monthly SIPs; the minimum varies by scheme and platform. Check the scheme information document or the FundzBazar platform for the current minimum before you set one up.
Is 12% a realistic return to assume?
It is an assumption for illustration, a little below the 12.93% that AMFI prescribes for equity-fund illustrations (the mean of 10-year rolling returns of the Nifty 50 between June 2013 and May 2023). It is not a promise. Returns vary widely from year to year, and some periods are negative. It is sensible to check your plan at 8% and 10% as well.
Can I change or stop my SIP?
Yes. A SIP can be paused, stopped, increased or reduced through your platform or the fund house, subject to their process and notice period. There is no penalty for stopping a SIP, though exit load and tax may apply when you redeem units.
Is SIP better than a lumpsum?
Neither is always better. A SIP spreads purchases over time and suits salaried investors; a lumpsum puts money to work immediately and can do better if markets rise steadily. Many investors use both — a lumpsum for money already available and a SIP from monthly income.
Is SIP safe?
A SIP is only a method of investing. The risk is that of the underlying scheme: an equity fund SIP is subject to market risk, a liquid fund SIP much less so. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
What is the difference between SIP and mutual fund?
A mutual fund is the product — a pool of money managed by an asset management company. A SIP is one of the ways to invest in it, the other being a lumpsum purchase.
How are SIP returns taxed?
On redemption, each instalment is treated separately. For equity funds, units held over 12 months attract long-term capital gains tax at 12.5% on gains above ₹1.25 lakh per financial year; shorter holdings are short-term gains taxed at a higher rate. Check the current rules for debt and hybrid funds.
Does the SIP date matter?
Over long periods the choice of date has a negligible effect. Pick a date a few days after your salary credit so the auto-debit never bounces.
What happens if I miss a SIP instalment?
The fund house simply skips that instalment; there is no penalty from the AMC, though your bank may charge for a failed mandate. Repeated failures can lead the platform to cancel the SIP registration.
Can I start a SIP through Two Plus Two Nine?
Yes. As an AMFI-registered Mutual Fund Distributor (ARN-171746) we help you complete KYC and set up SIPs in regular plans on the FundzBazar platform. We do not offer investment advice; we distribute schemes and explain how they work.