What is a SIP?
A SIP (Systematic Investment Plan) is a way of investing a fixed amount into a mutual fund every month, on a set date, automatically. Instead of trying to time the market with one large lump sum, you buy a little every month — more units when prices are low, fewer when prices are high. That averaging effect, called rupee-cost averaging in India (the same idea works in any currency), smooths out the risk of investing everything on one bad day. SIPs are the default way millions of people build long-term savings for retirement, a home, or their children's education, because the habit matters more than the starting amount: a modest monthly payment, kept up for years, has time to compound.
This calculator works in dollars, but the math is identical in any currency — read the figures as currency units if you invest in rupees or another currency.
The SIP formula
Where FV is the maturity (future) value, P is the monthly investment, i is the monthly return (expected annual return ÷ 12 ÷ 100), and n is the number of monthly payments. The final (1 + i) factor reflects this calculator's convention: each payment is made at the start of the month (an annuity due), so every payment earns one extra month of growth. If the expected return is 0%, the future value is simply P × n.
Worked example
You invest $10,000 a month for 10 years at an assumed 12% annual return. That is 120 payments totalling $1,200,000 invested. The formula gives a maturity value of $2,323,390.76 — so the estimated gains are $1,123,390.76, almost as much as everything you put in. Notice where the growth comes from: in the early years the gains are small, but in the later years your accumulated balance is large, so each 12% year adds far more than your $120,000 of new payments. That acceleration is compounding doing the heavy lifting, and it is why starting five years earlier usually beats investing more later.
What changes your result?
- Time. The single biggest lever. Doubling the period much more than doubles the gains, because the balance compounds on itself.
- Monthly amount. The maturity value scales in direct proportion — invest twice as much each month, end with twice as much.
- Expected return. A higher assumed return lifts the result a lot over long periods, but it is an assumption, not a guarantee. Equity funds have historically returned more than debt funds over long horizons, with much bumpier years along the way.
Returns are assumed and illustrative, not guaranteed. Real markets do not grow at a smooth 12% — they fall some years and jump in others — so use this page to compare plans and set targets, not to predict an exact outcome.
Worked example
You invest $10,000 a month for 10 years at an assumed 12% per year, paid at the start of each month. You put in $1,200,000 of your own money, the estimated gains are $1,123,390.76, and the maturity value is $2,323,390.76. Run the same plan for 15 years instead and you would invest $1,800,000 but end with roughly $4.99 million — the extra five years add far more growth than the extra payments alone.
How to use this calculator
- Enter the amount you can invest every month, comfortably and consistently.
- Enter the expected yearly return — be honest, not hopeful; long-run equity averages are often modelled around 10–12%.
- Enter the number of years you will stay invested.
- Read the maturity value in the green panel, and check how much of it is your money versus growth.
- Use the year-by-year table below to see how the growth accelerates in the later years.
SIP or lump sum?
If you already have a large amount available, investing it all at once has historically won more often than spreading it out, simply because the money is exposed to growth for longer. A SIP wins on behaviour and risk: it removes the fear of investing everything the day before a fall, and it fits how most people actually earn — monthly. Many investors combine both: a lump sum to start, then a monthly SIP on top. To model a single amount growing with no monthly payments, use the Compound Interest Calculator; to see a SIP as part of a retirement plan, try the Retirement Calculator.
Step-up SIPs
The most common improvement to a basic SIP is to raise the monthly amount each year as your income rises — for example by 10% annually. A step-up plan can add a surprisingly large amount to the final value, because the bigger payments arrive while the balance is already large. This calculator models a level payment so the comparison between plans stays clean; if you step up, your real outcome should land above the figure shown here, all else equal.