How it's calculated
Each monthly instalment is assumed to be invested at the start of the month and to compound at the monthly equivalent of your annual return. The future value is the sum of every instalment grown with compound interest — this is the standard SIP projection formula.
M = monthly investment · r = annual return ÷ 12 ÷ 100 · n = months
Worked example: investing $500/month for 10 years at 12% annual return (r = 0.01, n = 120) projects to about $116,170 — $60,000 invested plus roughly $56,170 of compounding gains. Stretch it to 20 years and the projection approaches $500,000, because compounding accelerates with time.
Frequently asked questions
What is a SIP?
A Systematic Investment Plan (SIP) is a way to invest a fixed amount regularly — usually monthly — into mutual funds or other investments. It builds wealth through disciplined investing and cost averaging, which smooths out market ups and downs.
How does compounding work in a SIP?
Each monthly instalment starts earning returns from the month it is invested, and those returns themselves earn returns in later months. Over years this compounding snowballs: in a 10-year SIP, the gains in the final years often exceed the entire first year's contributions.
Are SIP returns guaranteed?
No. SIPs invest in market-linked instruments, so returns vary with the market and can be negative in some years. The calculator projects growth at a constant assumed rate for illustration — actual results will differ. Longer horizons have historically smoothed out volatility.
What return assumption should I use?
Many planners use 10–12% per year for long-term equity SIPs as an illustration, 8% for balanced funds and 6–7% for debt-oriented ones. These are not predictions — try a conservative and an optimistic rate to see the range of possible outcomes.
Disclaimer: Our calculators are for education and planning only. Projections are estimates based on a constant assumed return — they are not financial advice and not a prediction of actual market performance. Investing involves risk, including loss of principal. Consult a licensed financial adviser before investing.
Keep learning
More tools: EMI Calculator · Percentage Calculator