What is a SIP?
A SIP (systematic investment plan) lets you invest a fixed amount in a mutual fund every month, usually by automatic bank debit. You buy more units when prices are low and fewer when they're high (rupee cost averaging), and your returns compound over time.
SIP formula
For a fixed monthly SIP invested at the start of each month, the future value is:
- P = monthly investment
- i = monthly rate of return = annual return ÷ 12 ÷ 100
- n = number of months
Example: ₹10,000 a month for 15 years at 12% a year grows to about ₹50.5 lakh, on a total investment of ₹18 lakh. With step-up, the calculator adds each year's higher SIP month by month.
The power of step-up SIP
Raising your SIP by 10% every year — in step with salary increases — can grow your final corpus dramatically. In the example above, a 10% annual step-up turns the ₹50.5 lakh into about ₹86.8 lakh (on ₹38.1 lakh invested). Try it with your own numbers.
What return should I assume?
Returns are never guaranteed. Long-term historical averages in India have been roughly 10%–14% a year for diversified equity funds, 7%–9% for hybrid funds and 6%–8% for debt funds, but individual years vary widely and past performance doesn't predict the future. Using a conservative figure (for example 10%–12% for equity) is sensible for planning.
Don't forget inflation and tax
₹1 crore in 15 years won't buy what ₹1 crore buys today. The "today's money" figure adjusts for inflation so you can plan realistically. Equity mutual fund gains are also taxed as capital gains when you redeem — long-term gains above the annual exemption are taxed at 12.5% under current rules.
Frequently asked questions
Is the SIP calculator accurate?
It is mathematically exact for a constant return. Real mutual fund returns vary every year, so treat the result as an estimate.
What is the minimum SIP amount?
Many mutual funds in India accept SIPs from ₹100 to ₹500 per month.
Is SIP better than a lump sum?
A lump sum invested at the right time can earn more, but SIP removes the need to time the market and builds the habit of regular investing. Many investors do both.
What is a step-up SIP?
A step-up (or top-up) SIP automatically increases your monthly investment by a fixed percentage or amount every year. Most fund houses let you set this up online.
