How SIP returns are calculated
A Systematic Investment Plan (SIP) uses the future value of a series formula, compounding each monthly contribution at your expected rate of return until maturity. Because each instalment is invested at a different time, the average purchase cost naturally smooths out over market ups and downs — a concept known as rupee-cost averaging.
Why starting early matters more than the amount
Compounding rewards time more than contribution size. A smaller SIP started 10 years earlier can outgrow a larger SIP started later, simply because the early money has more compounding cycles working on it.
Is the expected return guaranteed?
No — the return percentage you enter is an assumption based on historical fund or index performance, not a guarantee. Equity mutual funds typically show wide year-to-year variation; this calculator assumes a smooth average annual return for simplicity.
Frequently asked questions
Can I change my SIP amount later? Yes, most funds allow increasing (step-up) or pausing SIPs — increasing your SIP amount periodically can significantly boost the final corpus.
SIP vs lump sum — which is better? SIPs reduce timing risk and suit regular income earners; lump sum can outperform in consistently rising markets but carries more timing risk.