How the SIP calculator works
A systematic investment plan (SIP) puts a fixed amount into a mutual fund every month. Because each instalment stays invested for a different length of time, the corpus is not simply your total contribution plus a flat return — every instalment compounds separately until the day you redeem.
Formula
FV = P × [((1 + i)^n − 1) ÷ i] × (1 + i)
- P — the monthly instalment
- i — monthly return, i.e. the annual rate ÷ 12 ÷ 100
- n — total number of instalments (years × 12)
- FV — the corpus at the end of the period
Why the return assumption matters more than the amount
Over long periods the expected return drives the result far more than the instalment size. A ₹10,000 SIP for 15 years produces roughly ₹50 lakh at 12% but about ₹38 lakh at 9% — the same money invested for the same time, separated only by three percentage points.
That sensitivity is why it is worth planning with a conservative number. If your plan still works at 9-10%, a better decade becomes a bonus rather than a requirement.
Choosing a realistic expected return
Diversified Indian equity funds have historically delivered somewhere in the region of 10-13% annualised over long holding periods, debt funds closer to 6-7%, and hybrid funds in between. None of those are promises: returns arrive unevenly, and a bad final year matters more than a bad first year because the corpus is largest at the end.
If your goal is less than five years away, an equity return assumption is the wrong tool. Short-horizon money is usually better planned with a recurring deposit or a debt fund, where the outcome is far narrower.
What this projection leaves out
The calculation assumes a steady return every month, no missed instalments, and no charges. In practice the fund deducts an expense ratio, some schemes carry an exit load if you redeem early, and market returns fluctuate rather than arriving in equal monthly slices.
Tax also applies on redemption, not on the projected figure. For equity funds, long-term gains are taxed at a concessional rate above an annual exemption while short-term gains are taxed higher; debt fund gains are added to your income. Rates change with each Budget, so confirm the current position before you rely on a post-tax number.
Using the year-wise table
The table below the result shows how the corpus builds each year. The pattern is worth noticing: in the early years almost all of the balance is your own contribution, and the returns column only starts to dominate after roughly a decade. That crossover is the entire argument for staying invested rather than stopping when markets look uncomfortable.
Example: ₹10,000 a month for 15 years
- Monthly instalment
- ₹10,000
- Expected return
- 12% p.a.
- Duration
- 15 years (180 instalments)
- Total invested
- ₹18,00,000
- Projected value
- ₹50.46 lakh
- Of which returns
- ₹32.46 lakh
Your own contribution is about 36% of the final corpus; the remaining 64% comes from compounding. Extend the same SIP to 20 years and the projected value roughly doubles again, because the last few years compound on the largest balance.