How the SIP calculator works

A Systematic Investment Plan (SIP) lets you invest a fixed amount into a mutual fund every month. Because each instalment stays invested for a different length of time, the calculator uses the future value of an annuity formula to project how much your investment could grow.

Future Value = P × [((1 + i)^n − 1) / i] × (1 + i), where P is your monthly SIP amount, i is the monthly rate of return (your expected annual return ÷ 12 ÷ 100) and n is the total number of monthly instalments (years × 12). The (1 + i) factor reflects that each instalment is invested at the start of the month.

Enter your monthly investment, an expected annual return and the number of years. The tool instantly shows your total invested amount, the estimated returns (wealth gain) and the total future value.

The power of compounding and rupee-cost averaging

Two forces drive SIP wealth creation. Compounding means your returns themselves earn returns, so longer tenures matter far more than a slightly higher monthly amount. Rupee-cost averaging means you buy more units when markets fall and fewer when they rise, smoothing out your average purchase price over time.

• Start early — even a small SIP run for 20 years can outgrow a larger SIP started 10 years later.
• Step up your SIP each year as your income grows to reach goals faster.
• Stay invested through market cycles instead of stopping during downturns.
• Use separate SIPs for separate goals (retirement, education, home) so each can be tracked.

SIP tax benefits and treatment

SIPs into ELSS (Equity Linked Savings Scheme) funds qualify for a deduction of up to ₹1.5 lakh per financial year under Section 80C of the old tax regime, with a 3-year lock-in — the shortest lock-in among 80C options. Regular equity and debt fund SIPs do not get an 80C deduction.

Gains are taxed only when you redeem. For equity funds, long-term capital gains (units held over 12 months) are taxed at concessional rates above the annual exemption, while short-term gains are taxed at a higher flat rate. Debt fund gains are taxed as per your slab. A chartered accountant can help structure redemptions tax-efficiently.

Example: ₹10,000 monthly SIP for 10 years

Suppose you invest ₹10,000 every month for 10 years (120 instalments) at an assumed 12% annual return. Your total invested amount is ₹12,00,000. With monthly compounding, the projected future value is roughly ₹23.2 lakh — meaning estimated returns of about ₹11.2 lakh on top of what you put in. Increasing the tenure to 15 or 20 years increases the wealth gain dramatically because of compounding.

For CA firms and financial advisors

Chartered accountants and advisors use SIP projections during client financial planning to set realistic goal corpus targets, compare ELSS versus other 80C instruments and illustrate the impact of starting early. Because the figures are illustrative, pair them with proper risk profiling and a documented investment plan for your clients.

Illustrative SIP growth (₹10,000/month at 12% p.a.)