SIP Calculator

Estimate the future returns of your Systematic Investment Plan.

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Comprehensive Guide to SIP Investments

A Systematic Investment Plan (SIP) is a disciplined way of investing in mutual funds. It allows you to invest a fixed amount at regular intervals (daily, weekly, or monthly). It helps investors create wealth over the long term by instilling financial discipline and taking advantage of market volatility.

Key Benefits of SIP

Rupee Cost Averaging: SIPs help you buy more units when the market is low and fewer units when the market is high. This averages out the cost of your investment over time, reducing the risk of market volatility.
Power of Compounding: When you invest for a long period, your returns start generating their own returns. This "interest on interest" effect can grow a small monthly investment into a large corpus over 10–20 years.
Financial Discipline: Since the amount is auto-debited from your bank account, it forces you to save before you spend.
Start Small: You can start a SIP with as little as ₹500 per month, making it accessible to students and early-career professionals.

SIP vs. Lump Sum: Which is better?

While Lump Sum investments (investing a large amount at once) can be profitable when the market is low, they carry higher risk if the market falls immediately after. SIP is generally safer for beginners because it removes the need to "time the market." You invest across all market cycles, smoothing out the ups and downs.

How is the SIP Return Calculated?

This calculator uses the future value of an annuity formula. Since SIPs involve monthly payments, the formula is slightly complex compared to simple interest:

FV = P × ({[1 + i]^n - 1} / i) × (1 + i)

Where P is the monthly investment amount, i is the periodic interest rate (Annual Rate / 12 / 100), and n is the total number of payments (Years * 12).

Frequently Asked Questions (FAQs)

1. Are SIP returns guaranteed? No. SIPs invest in mutual funds (Equity or Debt), which are subject to market risks. However, over a long period (10+ years), diversified equity funds have historically delivered 12–15% annual returns in India.

2. Is SIP tax-free? It depends on the fund type. Returns from Equity Mutual Funds are taxed as Capital Gains. Long Term Capital Gains (LTCG) above ₹1.25 Lakh per year are taxed at 12.5%. Short Term gains (redeemed within 1 year) are taxed at 20%.

3. Can I increase my SIP amount later? Yes, this is called a "Step-up SIP." Most investment platforms allow you to increase your monthly contribution periodically as your salary increases, which can significantly boost your final corpus.

4. Can I withdraw money anytime? Yes, for most "Open-ended" mutual funds, you can stop the SIP and withdraw money anytime. However, ELSS (Tax Saving) funds have a lock-in period of 3 years.