SIP (Systematic Investment Plan) Calculator
Calculate the future value of monthly SIP investments with annual step-up, total invested amount, and estimated wealth gains.
SIP Calculator — interactive calculator, computed instantly in your browser.
SIP Investing Guide: Monthly Contributions, Step-Ups & Compounding
How Monthly SIPs Compound Into Long-Term Wealth
Key Takeaway: Fixed monthly SIP deposits grow linearly, but reinvested compound returns bend the maturity curve upward — time in the market matters more than timing it.
A Systematic Investment Plan (SIP) is a disciplined method of investing a fixed amount every month into mutual funds or market-linked assets. Instead of timing the market with a lump sum, SIPs spread purchases across market cycles, averaging your cost per unit through rupee-cost averaging.
1. The SIP Future Value Formula
Monthly SIPs are an annuity-due (deposits at the start of each month), so every installment compounds for its remaining months:
- M (Monthly Deposit): Fixed SIP installment (e.g., $500).
- r (Monthly Rate): Annual expected return divided by 12 (e.g., 12% / 12 = 1% = 0.01).
- n (Total Months): Years multiplied by 12 (e.g., 10 years = 120 months).
2. Worked Example ($500/month @ 12% for 10 Years)
- Monthly rate: r = 0.12 / 12 = 0.01, months: n = 120
- Growth factor: (1.01)^120 ≈ 3.3004
- FV = 500 × [(3.3004 − 1) / 0.01] × 1.01 = $116,169
- Total invested: $60,000 — estimated gains: $56,169 (nearly half the maturity value).
3. Why Add an Annual Step-Up?
Increasing your SIP by 10% every year (as your salary grows) on the same $500 starting plan raises the 10-year maturity from ~$116,170 to roughly $168,700. Step-ups align contributions with rising income and dramatically widen the compounding base in later years.
🔗 SIP & Wealth Growth Cross-References
A Systematic Investment Plan builds wealth through disciplined monthly contributions and the power of compounding. For lump-sum projections, visit our 💰 Financial Hub.
Compare SIP growth against lump-sum compounding or plan your retirement nest egg with the companion tools below.
Frequently Asked Questions (SIP Calculator)
Neither is universally better. Lump sums win in steadily rising markets because more capital compounds longer, while SIPs reduce timing risk and enforce discipline. For salaried earners without a large corpus, SIP is the practical default.
Long-term diversified equity funds have historically delivered 10-12% annualized over 10+ year horizons. Use 10% for conservative planning and 12% for optimistic scenarios, then stress-test both.
No. Enter your expected post-cost return (e.g., reduce gross expectation by the fund expense ratio and expected tax drag) to keep projections realistic.