SIP Calculator
Calculate your mutual fund Systematic Investment Plan (SIP) returns with exact monthly compounding. Model annual step-up contributions, inflation-adjusted real purchasing power, and long-term wealth creation.
Investment Parameters
Wealth Projection
Year-by-Year Growth Progression
| Year | Monthly SIP | Yearly Deposit | Total Invested | Future Value (Corpus) | Cumulative Gain |
|---|
How a Systematic Investment Plan (SIP) Works
A Systematic Investment Plan (SIP) is a disciplined wealth accumulation method that allows investors to allocate a fixed monetary sum into mutual funds at periodic intervals (usually monthly). Rather than attempting to time equity market peaks and troughs, SIP investors benefit from rupee-cost averaging, purchasing more fund units when prices drop and fewer units when markets rise.
M = P × [((1 + i)n – 1) / i] × (1 + i)
Where:
• M: Final maturity corpus value.
• P: Monthly investment installment.
• i: Periodic monthly rate of return (Annual Expected Return / 12 / 100).
• n: Total number of monthly contributions (Years × 12).
• (1 + i): Trailing factor reflecting investment at the beginning of each cycle (annuity due).
The Power of a Step-Up SIP: Beating Salary Inflation
Most investors commit to a static SIP (e.g., 10,000/month) and keep it unchanged for a decade. However, as your career advances and compensation scales, your savings capacity expands. Adding an annual Step-Up of 10% dramatically increases the exponential compounding effect:
| SIP Strategy (15 Years @ 12% CAGR) | Starting Monthly SIP | Total Capital Invested | Final Maturity Corpus | Extra Wealth Generated |
|---|---|---|---|---|
| Static SIP (No Step-Up) | 10,000 / month | 1,800,000 | 5,045,760 | Baseline |
| 10% Annual Step-Up SIP | 10,000 / month (+10%/yr) | 3,812,698 | 8,958,240 | +3,912,480 (+77.5%) |
SIP vs. Lump Sum: Which is Right for You?
- Choose an SIP: If you are salaried, receive recurring income, or want to eliminate emotional market volatility through disciplined rupee-cost averaging.
- Choose a Lump Sum: If you have an existing liquidity windfall (bonus, property sale, inheritance) and an investment horizon exceeding 7+ years.
- Hybrid Approach (STP): Park a lump sum in a low-risk liquid fund and execute a Systematic Transfer Plan (STP) into equity funds over 12 to 24 months.
Taxation on Mutual Fund SIP Returns
In equity-oriented mutual funds, profits are taxed as capital gains based on individual holding cycles for each monthly installment:
- Long-Term Capital Gains (LTCG): Units held for more than 12 months are taxed at 12.5% on gains exceeding 1.25 Lakh per financial year.
- Short-Term Capital Gains (STCG): Units redeemed before 12 months are taxed at a flat rate of 20%.
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Frequently Asked Questions
A Systematic Investment Plan (SIP) is an investment vehicle offered by mutual funds allowing investors to contribute fixed amounts of money at regular intervals (usually monthly) into an equity or debt fund, harnessing rupee-cost averaging and compound growth.
A Step-Up (or Top-Up) SIP allows you to automatically increase your monthly investment amount by a fixed percentage (e.g., 10%) each year as your income grows. Stepping up an investment by just 10% annually can result in up to 40% to 60% more total wealth over a 15-year period.
Historically, diversified Indian and global equity mutual funds (large-cap, flexi-cap, and index funds) have delivered long-term annualized returns (CAGR) between 12% and 15% over horizons of 7 to 10+ years.
Yes. Unlike fixed recurring deposits in banks, mutual fund SIPs carry zero lock-in periods or penalties for pausing, modifying, or terminating installments (with the exception of ELSS tax-saving funds, which enforce a mandatory 3-year statutory lock-in).
SEBI Mathematical & Compounding Standards
Calculations strictly implement standard annuity due compounding models with monthly capitalization cycles. Inflation discounting utilizes geometric consumer price index adjustments.
Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Historical returns are not indicative of future performance. Consult a certified financial planner before executing investment decisions.