SIP Calculator

How systematic investing builds long-term wealth

A Systematic Investment Plan (SIP) is a disciplined approach to investing where you commit a fixed dollar amount at regular intervals, typically monthly, into mutual funds, index funds, or brokerage accounts. Instead of trying to time the market with a single large deposit, SIP investing spreads purchases across months and years, letting compound growth work on every contribution.

This SIP calculator estimates the maturity value of your monthly contributions given an expected annual return and investment horizon. It also supports one-time lump sum mode for comparison. If you need to solve for the monthly deposit required to reach a specific target, use our goal SIP calculator. To model a starting nest egg combined with monthly top-ups, try the lumpsum plus SIP calculator. For standalone one-time deposits, see the lumpsum calculator. If you plan to increase contributions each year, model growth with the step up SIP calculator. If you already hold a lump sum in a debt fund and want to shift it gradually into equities, model the transfer schedule with the STP calculator. When you eventually draw income from a matured corpus, project monthly payouts with the SWP calculator.

The SIP future value formula: Annuity due compounding

Most SIP programs debit your account at the start of each billing cycle, so each installment begins earning returns immediately. In financial mathematics, beginning-of-period cash flows form an annuity due. Because every deposit compounds for the full interval, SIP returns are slightly higher than an ordinary annuity where payments arrive at period end. For a deeper look at beginning-of-period payments, see our future value of annuity due calculator.

The future value ($FV$) of monthly deposits ($P$) over $n$ months at monthly periodic return $r$ is:

Where $r = \frac{R}{12 \times 100}$ converts the annual nominal return $R$ to a monthly rate, and $n = \text{years} \times 12$ is the total number of monthly contributions.

Lump sum comparison formula

When comparing a one-time investment against monthly SIP contributions, the lump sum uses standard annual compound interest:

Where $P$ is the initial principal, $R$ is the annual return as a decimal, and $T$ is the investment horizon in years.

Step-by-step worked example

Suppose you invest $500 per month for 10 years and expect a 12% annual return. Here is how the calculator arrives at the maturity value:

1. Monthly rate: $r = 12\% / 12 = 1\%$ per month.
2. Total periods: $n = 10 \times 12 = 120$ months.
3. Total invested: $\$500 \times 120 = \$60,000$.
4. Annuity due factor: $\left[\frac{(1.01)^{120} - 1}{0.01}\right] \times 1.01 = 232.34$.
5. Maturity value: $\$500 \times 232.34 = \$116,169.54$.
6. Wealth gained: $\$116,169.54 - \$60,000 = \$56,169.54$ in compound returns.

The same $60,000 kept as cash would never grow. Compounding turns disciplined monthly deposits into nearly double the principal over a decade at 12% annual return.

Practical tips for SIP investors

• Start early: Time in the market matters more than timing the market. A 20-year SIP at moderate returns often outperforms a larger 10-year plan.
• Automate contributions: Set up automatic transfers on payday so investing happens before discretionary spending.
• Use realistic return assumptions: Long-term US equity index returns have historically averaged around 10% before inflation, but future results vary. Stress-test lower rates with our compound interest calculator.
• Diversify across asset classes: Broad index funds reduce single-stock risk. Review portfolio allocation with our mutual fund calculator.
• Rebalance periodically: As markets move, your allocation drifts. Use our portfolio rebalancing calculator to keep risk aligned with your goals.

Frequently asked questions