SIP Calculator

A SIP, or Systematic Investment Plan, is a way of investing a fixed amount in a mutual fund at regular intervals — usually every month — instead of putting in one large sum. Each installment is debited automatically and buys units of the fund at that day's price (its NAV).

Because the amount is fixed, your money buys more units when the price is low and fewer when it is high, which averages out your purchase price over time. This is called rupee-cost averaging. It also turns investing into a habit: you don't have to decide when to invest, because the schedule does.

For example, investing $52 a month for 15 years means putting in $9,360 in total. At an assumed 12% a year, this calculator estimates it grows to about $26,238 — roughly $16,878 of that from returns. The 12% is an assumption you can change, not a promise: real fund returns vary from year to year and can be negative.

Working backward from a target amount instead? The Goal SIP Calculator finds the monthly SIP you would need to reach it.

Each monthly installment compounds for a different length of time — the first for the whole period, the last for a single month — so a SIP's maturity value uses the future value of equal payments made at the start of each month:

FV = P × [((1 + r)^n − 1) / r] × (1 + r)

Here P is your monthly investment, r is the monthly rate of return (the annual rate divided by 12, then by 100), and n is the number of months invested (years × 12).

For the defaults above, P = $52. A 12% annual return gives r = 12 ÷ 12 ÷ 100 = 0.01, and 15 years gives n = 180. Then (1.01)^180 = 5.9958, so [(1.01)^180 − 1] / 0.01 = 499.58. Multiplying by $52gives about $25,978, and the final × 1.01 gives $26,238 — the same figure the calculator above produces for those inputs.

Because early installments compound the longest, they carry disproportionate weight. In this example the first 5 years of installments are only a third of the money you put in ($3,120 of $9,360), yet they account for about 54% of the final corpus. That is why staying invested for a long horizon matters more than the exact monthly amount.

Already invested? The CAGR Calculator can check your actual returns after the fact. It compares one starting value with one ending value, so for a SIP with monthly installments treat it as a rough guide — the exact measure is XIRR, which weights each installment by its date.

They answer different situations. A SIP is how most people invest, out of monthly income. A lump sum applies when you already have a large amount available, such as a bonus or maturity proceeds.

If the money is there today, a calculation with a steady return always favours investing it all at once, because every unit starts earning sooner. $6,240 invested as a lump sum for 5 years at 12% grows to about $11,336; the same $6,240 invested as $104 a month over those 5 years (with the not-yet-invested part earning nothing) grows to about $8,579. But that gap comes from assuming a smooth 12%. Real markets fall as well as rise, and a SIP's real benefit — spreading your entry points so you don't invest everything just before a downturn — is exactly what a fixed-return calculator can't show.

For how to choose, including the middle path of investing part now and staggering the rest, read the full SIP vs Lump Sum lesson.

• LessonSIP vs Lump Sum — Averaging in beats investing all at once more often than intuition suggests — but not universally.
• CalculatorStep-Up SIP Calculator — A SIP that increases every year, against a flat SIP of the same starting amount.