How this SIP calculator works
A Systematic Investment Plan (SIP) is a simple way to invest a fixed amount at regular
intervals, usually monthly, into a mutual fund or similar product.
This calculator assumes that:
- You invest the same amount every month.
- Returns compound monthly at a constant rate based on your annual assumption.
- Contributions are made at the end of each month.
With monthly contribution P, monthly rate r and total
number of months n, the future value at the end of the SIP is:
Monthly rate r = annualRate / 12
Future value FV = P × ((1 + r)ⁿ − 1) / r (payments at month-end)
Total invested = P × n
Returns earned = FV − Total invested
Example: SIP over 10 years
Suppose you invest $200 per month for 10 years
(120 months) at an assumed 12% annual return.
- Monthly rate
r ≈ 0.12 / 12 = 0.01 (1%)
- Total months
n = 10 × 12 = 120
Plugging into the formula:
FV ≈ 200 × ((1.01)¹²⁰ − 1) / 0.01
≈ 200 × (3.30039 − 1) / 0.01
≈ 200 × 230.039
≈ 46,007.80
You would contribute $24,000 overall (200 × 120),
and the remaining amount (around $22,008) would be
the growth from compounding returns.
Tips when using SIP calculators
- Use a conservative return assumption; markets are volatile.
- Experiment with increasing your contribution every year.
- Longer periods benefit more from compounding.
- Remember that inflation reduces the real value of future money.
Frequently asked questions
Can I use this for weekly or quarterly SIPs?
This tool is designed for monthly SIPs, which are the most common. For other
frequencies, you can approximate by converting your contribution and rate to a
monthly equivalent.
Are the results guaranteed?
No. The calculator uses a fixed return assumption for illustration. Real-world
investment returns move up and down and may be higher or lower than the rate you enter.
Is tax or inflation included?
No. All amounts are shown before tax and without adjusting for inflation. For
long-term planning, you may wish to use a slightly lower “real” rate that already
reflects expected inflation.