How to Use This Calculator
- Enter monthly SIP installment: Amount allocated each month.
- Select expected return: Historically 10%–14% for diversified equities.
- Specify horizon: Longer periods experience exponential compounding acceleration.
Formula and Calculation Steps
M = P × [((1 + i)ⁿ - 1) / i] × (1 + i)
Where i = (Rate ÷ 12 ÷ 100), n = Total MonthsWorked Examples and Reference Table
| Monthly SIP | 5 Years (12%) | 10 Years (12%) | 15 Years (12%) |
|---|---|---|---|
| $250 / mo | $20,622 | $58,085 | $126,116 |
| $500 / mo | $41,243 | $116,170 | $252,232 |
| $1,000 / mo | $82,486 | $232,339 | $504,464 |
Frequently Asked Questions
What is a Systematic Investment Plan (SIP)?
A SIP is an investment method where an investor deposits a fixed amount of money at regular intervals (typically monthly) into mutual funds or exchange-traded funds (ETFs).
What are the main benefits of SIP investing?
SIP enforces disciplined investing, removes the urge to time the stock market, and leverages rupee-cost or dollar-cost averaging to buy more units when market prices dip.
What average rate of return can I expect from equity mutual funds?
Historically, diversified index funds have delivered long-term annualized returns between 10% and 14%, though returns are not guaranteed and fluctuate year to year.
Can I increase my monthly SIP amount over time?
Yes, known as a "Step-up SIP", increasing your monthly deposit by 5% to 10% each year as your income grows substantially boosts long-term wealth.
Is SIP better than a lump sum investment?
SIP carries lower timing risk during market volatility, making it ideal for regular salaried earners investing from monthly cash flow.