SIP Calculator
Last updated: 27 June 2026
Reviewed by Gavin Meiring, Lead research and primary author · Doctoral Candidate (Corporate Governance) · Research and drafting assisted by AI
- SIP stands for Systematic Investment Plan — India's hugely popular name for dollar-cost averaging, where you invest a fixed amount in a mutual fund at regular intervals.
- India's fund industry began in 1964, when the government created the Unit Trust of India — and from the 2000s SIPs became a household habit, with tens of millions of Indian investors now contributing monthly.
- The world's first modern mutual fund was the Massachusetts Investors Trust, launched in Boston in 1924 — and the SIP idea it embodies has grown into a global industry built on regular small contributions.
SIP Calculator (Systematic Investment Plan)
A SIP calculator helps you estimate the future value of regular, periodic investments made into a mutual fund or investment account over time. It is widely used by investors in India and across Asia who make monthly contributions to mutual funds, and by anyone who wants to model the effect of disciplined, regular investing. The calculator shows how small regular amounts can compound into significant wealth.
How to Use the SIP Calculator
- Enter your monthly investment amount (the amount you plan to invest each month).
- Input the expected annual rate of return as a percentage.
- Enter the investment duration in years.
- The calculator shows the total amount invested, the estimated returns earned, and the projected final corpus.
- Adjust the inputs to compare different contribution amounts, time horizons, or return assumptions.
The Formula
The SIP future value formula is based on the future value of an annuity, adjusted for monthly compounding.
Future Value = P multiplied by [((1 plus r) raised to the power of n) minus 1] divided by r, then multiplied by (1 plus r)
Where: P = monthly investment amount r = monthly rate of return (annual rate divided by 12) n = total number of monthly investments (years multiplied by 12)
The final multiplication by (1 plus r) adjusts for the fact that each payment earns one additional period of growth, as SIP investments are typically made at the start of each period.
Total amount invested = P multiplied by n Total returns earned = Future Value minus Total Amount Invested
Real-World Example
You invest £500 per month into a mutual fund for 20 years, expecting an annual return of 10%.
Monthly rate (r) = 10% divided by 12 = 0.8333% Number of payments (n) = 20 multiplied by 12 = 240
Future Value = 500 multiplied by [((1.008333) raised to the power of 240) minus 1] divided by 0.008333, multiplied by 1.008333
(1.008333) to the power of 240 = approximately 7.328
Future Value = 500 multiplied by (7.328 minus 1) divided by 0.008333 multiplied by 1.008333 = 500 multiplied by 6.328 divided by 0.008333 multiplied by 1.008333 = 500 multiplied by 759.37 multiplied by 1.008333 = approximately £382,697
Total invested = £500 multiplied by 240 = £120,000 Total returns = £382,697 minus £120,000 = £262,697
Your £120,000 in contributions grows to roughly £382,697, with £262,697 coming purely from compounding. This illustrates why time in the market is one of the most powerful levers available to regular investors.
Raising the contribution each year
A step-up SIP increases the monthly amount once a year, usually in line with a pay rise. The arithmetic is worth seeing before you commit to a percentage, because the effect on the final corpus is larger than the percentage suggests.
Take the same £500 a month at 10% a year over 20 years, and raise the contribution at the start of each year by the percentage in the first column.
| Annual step-up | Monthly amount in year 20 | Total invested | Final corpus | Growth multiple |
|---|---|---|---|---|
| 0% | £500 | £120,000 | £382,848 | 3.190 |
| 5% | £1,265 | £198,396 | £541,285 | 2.728 |
| 10% | £3,062 | £343,650 | £807,270 | 2.349 |
| 15% | £7,388 | £614,661 | £1,264,381 | 2.057 |
A 5% annual step-up raises the final corpus from about £382,848 to about £541,285, an increase of roughly 41% in the end result for a contribution that grows slowly. The growth multiple falls as the step-up rises, and that is not a fault in the maths. Each later contribution has less time to compound, so the later, larger payments buy their growth more expensively than the early ones did.
Check the invested column against the corpus and the pattern is clear. Without a step-up, £120,000 of contributions turns into £382,848. With a 10% step-up, £343,650 of contributions turns into £807,270. Roughly £223,000 more money went in and roughly £424,000 more came out, because the extra contributions still had years of compounding ahead of them.
Paying at the start of the month against the end
The (1 + r) factor in the formula is the whole of the difference between the two payment conventions, and it is easier to see in a table than in the algebra.
| Convention | Payment date | Factor applied | Future value of £500 a month at 10% for 20 years |
|---|---|---|---|
| Start of each month (annuity due) | Day 1 | Multiplied by 1.008333 | £382,848.45 |
| End of each month (ordinary annuity) | Last day | No extra factor | £379,684.42 |
Both rows use the same £500, the same 10% a year and the same 240 payments. Paying on the first of the month is worth £3,164.04 more at the end, which is exactly one monthly rate applied to the whole result: £382,848.45 divided by £379,684.42 equals 1.008333.
That difference of just over £3,000 on a £120,000 investment over 20 years is small, and it explains why the two conventions are often treated as interchangeable in casual planning. They are not interchangeable in a spreadsheet, where a formula written for an ordinary annuity will understate a SIP by one monthly rate.
The rounding note on the example above
The worked example above uses a monthly rate rounded to 0.8333% and a growth factor rounded to 7.328, which gives £382,697. Run the same numbers with the full-precision monthly rate, 0.00833333, and the factor is 7.3281, which gives £382,848.
The two answers differ by £151, or about 0.04%, and the gap comes entirely from rounding the monthly rate at the start rather than from a difference in method. The calculator keeps the full-precision rate, so its output will match the £382,848 figure. If you are checking the tool by hand, round the monthly rate at the end of the calculation rather than the beginning, or expect a small difference in the last two or three digits.
The Power of Starting Early
The SIP calculator vividly demonstrates why starting early matters far more than investing large amounts later. Consider two investors.
Investor A starts at age 25 and invests £300 per month for 35 years at 8% per year. Final corpus: approximately £683,000.
Investor B starts at age 35 and invests £600 per month (twice as much) for 25 years at the same 8% return. Final corpus: approximately £566,000.
Despite investing twice as much each month, Investor B ends up with less because they started 10 years later. The extra decade of compounding that Investor A enjoyed is worth more than doubling the monthly contribution.
This is often called the "early start advantage" and is the strongest argument for beginning SIP contributions as soon as possible, even with modest amounts.
Putting a figure on the head start
Recompute those two investors from first principles, at the full-precision monthly rate, and the shape of the comparison holds while the figures move slightly.
| Investor | Monthly amount | Years | Total invested | Final corpus |
|---|---|---|---|---|
| A, started at 25 | £300 | 35 | £126,000 | £692,753 |
| B, started at 35 | £600 | 25 | £180,000 | £574,420 |
The two rows above sit about 1% to 1.5% above the approximate figures quoted just above them, which is a rounding convention rather than a disagreement about the method. Both readings support the same conclusion: Investor B pays half as much again into the plan and still finishes roughly £110,000 to £120,000 short.
Put a number on the decade. To reach Investor A's corpus in only 25 years, Investor B would have to contribute £723.60 a month instead of £600. The ten-year head start is therefore worth £423.60 a month across the second investor's 25-year window, which is more than the £300 a month Investor A was paying in the first place.
Two habits follow from this. Start the contributions before the amount feels impressive, because the amount can be raised later and the start date cannot be moved. When you do raise the amount, raise it against your income, so the increase keeps pace with what you can actually afford.
Method and assumptions
The calculator uses a fixed set of assumptions, and knowing them tells you when the output is a reliable planning figure and when it is a rough shape.
The monthly rate is the nominal annual rate divided by 12, not an effective rate built from monthly compounding. A 10% a year input becomes 0.8333% a month rather than the 0.7974% that would compound to exactly 10% over twelve months. Contributions are treated as made at the start of each period, which is what the (1 + r) factor represents.
The rate of return is held constant for the whole term. Real markets do not deliver 10% every year, and a sequence of poor years early in the term costs more than the same poor years late, because the early money has less time to recover. The calculator cannot show sequence risk, so treat the output as a central path rather than a worst case.
The calculation ignores costs and taxes. Fund expense ratios, exit loads, platform fees and the tax on gains all reduce the final figure, and small annual charges compound against you exactly as returns compound for you. A 1% annual expense ratio on a 20-year plan takes a meaningful bite out of the corpus and appears nowhere in the output.
The figure is nominal, not adjusted for inflation. A corpus of £382,848 in 20 years buys what £382,848 buys in 20 years, not what it buys today. At 5% inflation, money loses about 62% of its purchasing power over 20 years, so a nominal projection is an upper bound on the lifestyle that corpus supports.
Finally, the calculator models the amount you contribute, not the amount your fund grows by after charges. Change one assumption at a time and compare the outputs, rather than changing the contribution, the rate and the term together and losing track of which one moved the answer.
Frequently Asked Questions
What is a realistic rate of return to use in a SIP calculator? For equity mutual funds over long periods (15 years or more), historical returns in many markets have averaged between 8% and 12% per year. However, past performance does not guarantee future returns. For a conservative estimate, using 7% to 8% is prudent. For a growth-oriented assumption, 10% to 12% is often used in projections.
Can I increase my SIP amount over time? Yes. A step-up SIP (also called a top-up SIP) allows you to increase your monthly contribution by a fixed percentage each year, typically 5% to 10% in line with salary growth. This approach significantly increases the final corpus and is worth modelling separately if you expect your income to grow.
Is SIP only for mutual funds? SIP as a concept applies to any regular, periodic investment. While the term is most commonly used for mutual funds in India, the same mathematical framework applies to regular contributions into an ISA, pension, ETF, or any investment account that compounds returns.
What happens if I miss a SIP payment? Missing an occasional payment simply means that month's contribution does not enter the portfolio and does not earn future returns. Most fund providers do not charge a penalty for a missed SIP instalment, but repeated missed payments may result in the SIP being cancelled. The impact on the final corpus depends on how early in the investment period the missed payments occur.
Also try these free tools related to SIP Calculator (Systematic Investment Plan): - Investment Calculator