SIP Calculator | Monthly & Goal SIP Explained
💡 Key Tips
- Time matters more than amount. ₹5,000 a month for 25 years beats ₹15,000 a month for 10 years, even though you invest less in total.
- Use goal mode backwards from a real number — a home down payment, a college fee, a retirement corpus — rather than picking a round figure.
- Set the SIP date within a few days of your salary credit so the money leaves before you can spend it.
- 12% is a reasonable long-run assumption for diversified equity funds in India. Model 10% too, so you know what a weaker decade looks like.
- Always check the inflation-adjusted figure. A ₹1 crore corpus 20 years out buys roughly what ₹31 lakh buys today at 6% inflation.
⚠️ Things To Watch
- Returns are assumed to compound smoothly. Real equity returns are lumpy — you will see negative years, sometimes back-to-back.
- This is a pre-tax figure. Equity fund gains attract capital gains tax on redemption, so your realised corpus will be lower.
- Expense ratio and exit load are not deducted. A 1% expense ratio over 20 years quietly removes a meaningful slice of the final number.
- The calculation assumes you never miss an instalment. Stopping a SIP for even a year during a downturn changes the outcome materially.
- Past fund performance does not carry forward. Do not plug in a fund’s trailing 3-year return as your long-term assumption.
📋 Disclaimer
This calculator is provided for educational and informational purposes only. It does not constitute financial, investment, or trading advice. Trading and investing carry substantial risk of loss and are not suitable for every investor. Past performance is not indicative of future results. Always consult a qualified financial advisor and conduct your own due diligence before making any trading or investment decisions.
📐 SIP Formulas Explained
1. Future value of a monthly SIP
2. Goal SIP — the same formula, solved backwards
3. Total invested and wealth gained
4. Inflation-adjusted (real) value
A Systematic Investment Plan invests a fixed amount at a fixed interval. This guide explains the compounding formula, how to reverse it to find the monthly amount a goal needs, and why duration matters more than instalment size. Educational only, with no fund recommendations.
What a SIP is and why it compounds
A Systematic Investment Plan invests a fixed amount at a fixed interval, usually monthly. Because the amount is constant while the unit price varies, you buy more units when prices are low and fewer when they are high. That is rupee-cost averaging, and it removes the need to decide when to invest.
The compounding effect builds slowly then accelerates. Each instalment has less time to grow than the one before it, so the earliest contributions do the heaviest lifting. This is why duration matters more than instalment size — a point that surprises most people the first time they see the numbers.
The SIP formula, and running it backwards
For instalments invested at the start of each month:
FV = P × [ ((1 + i)n − 1) ÷ i ] × (1 + i)
where P is the monthly amount, i is the monthly rate (annual rate divided by 12 then by 100), and n is the total number of instalments.
Worked example. ₹10,000 a month for 15 years at 12% gives i = 0.01 and n = 180, producing about ₹50.46 lakh from ₹18 lakh invested. Roughly ₹32.46 lakh of that is compounding rather than contribution.
Rearranging the same formula answers the more useful question: what monthly amount reaches a target? Reaching ₹1 crore in 15 years at 12% needs about ₹19,819 a month. Extending to 20 years drops it to roughly ₹10,009 — five extra years nearly halves the monthly burden.
Why duration beats instalment size
The clearest way to see the effect is to compare two plans that invest similar totals over different periods, both at 12%.
| Plan | Total invested | Maturity value |
|---|---|---|
| ₹5,000 a month for 25 years | ₹15.00 lakh | about ₹94.88 lakh |
| ₹15,000 a month for 10 years | ₹18.00 lakh | about ₹34.85 lakh |
The first plan invests ₹3 lakh less and finishes with nearly three times as much. Nothing separates them except time in the market.
One practical note: set the SIP date within a few days of your salary credit, so the money leaves the account before it can be spent elsewhere.
What the calculator does not include
Returns are assumed to compound smoothly at a constant rate. Real equity returns are lumpy, with negative years that sometimes arrive back to back. Model 10% alongside 12% so you know what a weaker decade looks like.
The maturity figure is before tax and costs. Equity fund gains attract capital gains tax on redemption, and the expense ratio is not deducted — a 1% annual expense ratio quietly removes a substantial slice over twenty years. Exit load may also apply on early redemption.
Always check the inflation-adjusted number. At 6% inflation, a ₹1 crore corpus twenty years out buys roughly what ₹31 lakh buys today. The calculation also assumes no missed instalments; stopping during a downturn changes the outcome materially.
Related tools: Lumpsum calculator · Step-up SIP calculator · XIRR calculator
Frequently asked questions
How is SIP return calculated?
The future value formula treats each monthly instalment as growing for the number of months remaining until maturity. Written compactly it is P multiplied by the compounding factor for n instalments at monthly rate i, with an extra factor for instalments made at the start of each month.
How much SIP do I need to reach 1 crore rupees?
At an assumed 12% annual return, reaching one crore in 15 years needs roughly 19,819 rupees a month. Over 20 years the same target needs about 10,009 rupees a month. The longer the period, the smaller the monthly commitment, because compounding does more of the work.
Is 12 percent a realistic return assumption?
Twelve percent is a commonly used long-run assumption for diversified equity funds in India, but it is an assumption rather than a promise. Actual returns vary widely by period and by fund. Running the same calculation at 10% is a sensible way to see how a weaker decade would change the outcome.
Does the SIP calculator account for tax?
No. The maturity value shown is before tax and before costs. Equity fund gains attract capital gains tax when you redeem, and the fund’s expense ratio reduces returns each year. Your realised corpus will therefore be lower than the calculated figure.
Educational and informational content only. EquityTimer is not a SEBI-registered investment adviser and does not provide buy, sell or hold recommendations. Data may contain errors or delays; verify independently and consult a registered financial adviser before making any investment decision.