What is a SIP Calculator?
A Systematic Investment Plan (SIP) lets you invest a fixed amount every month into a mutual fund or similar instrument. This SIP calculator estimates how much your regular contributions could grow to by maturity, assuming a steady annual rate of return compounded monthly. It works for any currency — just enter the amount in your own currency.
How to Use It
Enter your monthly investment amount, your expected annual rate of return as a percentage, and the number of years you plan to invest. The calculator returns the estimated future value (maturity amount), the total amount you actually invested, and the estimated gains from compounding.
The Formula Explained
The future value of a SIP is calculated with the annuity-due formula:
$$FV = P \cdot \frac{(1 + i)^{n} - 1}{i} \cdot (1 + i)$$
Here \(P\) is the monthly contribution, \(i\) is the monthly rate (annual return ÷ 12 ÷ 100), and \(n\) is the total number of months. The trailing \((1 + i)\) factor assumes each contribution is made at the beginning of the month, so every instalment earns a full month of growth.
Worked Example
Suppose you invest 5,000 per month for 10 years at an expected 12% annual return. The monthly rate \(i = 0.12 / 12 = 0.01\), and \(n = 120\) months. Plugging in gives a maturity value of about 1,161,695, against 600,000 invested — an estimated gain of roughly 561,695 from compounding.
FAQ
Are returns guaranteed? No. Market-linked returns vary; this tool uses a constant assumed rate for illustration only.
Why is the result higher than simple interest? Each monthly instalment compounds for the remaining period, so earlier contributions grow the most.
Does it account for inflation or taxes? No. The figures are nominal pre-tax estimates; adjust your expected return downward to approximate real returns.
