SIP Calculator
Systematic Investment Plan calculator
Inputs
Projected outcome
What is a SIP?
A Systematic Investment Plan (SIP) is the most common way Indian mutual fund investors deploy capital. Instead of investing a large amount upfront, the investor commits to a fixed monthly amount — say ₹5,000 or ₹10,000 — and the AMC purchases fund units at the prevailing NAV on a chosen day each month.
The benefits are practical and behavioural rather than mathematical: SIPs enforce discipline, average out unit cost across market cycles (rupee cost averaging), and allow investors with regular income to invest in equity without having to time the market.
The formula
The calculator uses the standard annuity-due future value formula:
FV = P × [ ((1 + r)n − 1) / r ] × (1 + r)
Where P is the monthly investment, r is the monthly rate of return (annual rate / 12), and n is the number of months. The trailing (1 + r) factor captures the fact that each instalment grows for one additional period because it is invested at the start of the month, not the end.
What return rate should I assume?
There is no honest single answer — it depends on the asset class and your time horizon. For directional planning, the long-term averages observed in Indian markets are approximately:
- Equity mutual funds — 11 to 13 % p.a. over 10+ year windows
- Hybrid (aggressive / balanced advantage) funds — 9 to 11 % p.a.
- Debt mutual funds — 6 to 8 % p.a. depending on duration and credit risk
- Liquid / ultra-short debt funds — 4 to 6 % p.a.
Past performance does not guarantee future returns. We recommend running the calculator at a few different rates (conservative, base case, optimistic) to understand the range of possible outcomes.
SIP versus lumpsum
A common question is whether to invest a large amount upfront (lumpsum) or stretch it over months (SIP). Purely mathematically, in a steadily rising market a lumpsum invested at t=0 grows for the longest period and produces a higher terminal value. In a falling or sideways market, SIP wins by buying more units at lower NAVs. The choice in practice often comes down to (a) whether the investor has the lumpsum available, and (b) the investor's tolerance for the psychological pain of seeing a lumpsum drop in value soon after deployment.
Taxes on SIP returns
Each SIP instalment is treated as a separate investment with its own purchase date. Capital gains tax depends on the asset class:
- Equity mutual funds — Long-term (held over 12 months): gains over ₹1.25 lakh per financial year are taxed at 12.5 %. Short-term: 20 %.
- Debt mutual funds (post April 2023): gains are taxed at the investor's income-tax slab rate regardless of holding period.
- Hybrid funds are taxed as equity or debt based on their underlying equity allocation (more or less than 65 %).
Tax laws change frequently — please consult a qualified tax adviser before relying on these rules for your situation. See our disclosures.