What is a Systematic Investment Plan (SIP)?

A SIP is a disciplined investment approach where you invest a fixed amount regularly (typically monthly) in mutual funds or other investment vehicles, regardless of market conditions.

How does SIP differ from lump sum investing?

SIP spreads investments over time, reducing timing risk through dollar cost averaging. Lump sum invests all at once, which can be advantageous in rising markets but riskier if timing is wrong.

What is dollar cost averaging?

When markets are low, your fixed SIP amount buys more units; when high, it buys fewer. Over time, this averages your purchase cost and reduces the impact of market volatility.

How much should I invest through SIP?

Financial experts recommend investing 20-30% of income. Start with an amount you can consistently maintain, even if small. Increase as income grows. Consistency matters more than amount.

What returns can I expect from SIP?

Returns depend on the underlying investment. Equity funds have historically returned 12-15% annually over long periods, though with volatility. Debt funds offer more stable 6-8% returns.

Can I stop or modify my SIP?

Yes, most SIPs are flexible. You can pause, stop, increase, or decrease contributions. Some funds may have minimum investment periods or exit loads for early redemption.

What's the power of compounding in SIP?

Compounding accelerates growth as returns earn their own returns. Starting early is crucial—a 10-year SIP can grow more than a 5-year SIP with double the monthly investment.

Is SIP better for beginners?

Yes, SIP is ideal for beginners because it enforces discipline, reduces timing anxiety, starts with small amounts, and smooths out market volatility through regular investing.

SIP Calculator

Calculate systematic investment plan returns over time

Instant results•No signup•Estimates only

Quick Presets

Monthly Investment

Expected Annual Return

Investment Period

Total Value at Maturity

$1,161,695

Total Invested

$600,000

Wealth Gained

$561,695

+93.6%

Monthly SIP Amount

$5,000

Total Months

120 months

Visualization

Growth Projection

Total Value
Contributions

Final Value

$148,023

Total Contributed

$70,000

Earnings

+$78,023

Results are projections based on consistent contributions and rates.

Results are estimates for informational purposes only and do not constitute financial advice. Actual savings may vary based on interest rate changes, contribution consistency, and account terms.

How calculations work Full disclaimer

SIP Calculator Formula

F V = P \times \frac{( 1 + r ) ^{n} - 1}{r} \times (1 + r)

Where FV is the future value, P is the periodic (monthly) investment amount, r is the periodic (monthly) interest rate, and n is the total number of investments (months). The final (1 + r) factor accounts for the first payment earning interest from day one.

How the SIP Calculator Works

1Enter your planned monthly investment amount
2Set the expected annual rate of return (typically 8-15% for equity funds)
3Choose your investment duration in years
4The calculator applies the SIP formula to project future value
5View the breakdown of total invested vs. wealth gained

SIP Calculator Key Terms

SIP: Systematic Investment Plan—a method of investing a fixed amount regularly (usually monthly) in mutual funds or other investment vehicles.
Rupee Cost Averaging: By investing regularly regardless of market conditions, you buy more units when prices are low and fewer when high, averaging out your cost.
Compounding: Returns earned on your investment generate their own returns over time, creating exponential growth.
NAV: Net Asset Value—the per-unit price of a mutual fund, calculated as total assets minus liabilities divided by units outstanding.

SIP Calculator Tips

•Start early—even small amounts benefit enormously from long compounding periods
•Stay invested during market downturns to benefit from rupee cost averaging
•Increase SIP amounts whenever your income rises (step-up SIP)
•Choose direct plans over regular plans to save 0.5-1% in annual expenses
•Review and rebalance your portfolio annually

When to Use This SIP Calculator

✓Planning long-term wealth building
✓Saving for retirement through mutual funds
✓Comparing different SIP amounts and durations
✓Setting realistic investment goals
✓Understanding the power of consistent investing

SIP Calculator Examples

Long-Term Wealth Building

Monthly SIP:$500Return:12%Years:20

Result:$495,504 total value

Investing $500/month at 12% annual returns for 20 years grows to $495,504. Total invested: $120,000.

Retirement Planning

Monthly SIP:$1,000Return:10%Years:30

Result:$2.26M total value

Consistent $1,000/month investments at 10% over 30 years builds substantial retirement wealth.

Short-Term Goal

Monthly SIP:$300Return:8%Years:5

Result:$22,080 total value

For a 5-year goal, $300/month at 8% returns grows to $22,080 (invested: $18,000).

Understanding SIP in Depth

A Systematic Investment Plan (SIP) is one of the most powerful wealth-building strategies available to individual investors. By investing a fixed amount at regular intervals, you harness the power of compounding and market-cycle averaging.

The Mathematics of SIP

The SIP formula differs from lump-sum compound interest because each monthly investment has a different compounding period. The first investment compounds for the full duration, while the last investment has minimal compounding time. The formula accounts for this by treating each payment as a separate investment.

Why SIP Beats Lump-Sum Investing

Most investors don't have large sums to invest at once. SIP allows you to start with whatever amount you can afford. More importantly, by investing regularly through market ups and downs, you practice "dollar cost averaging"—buying more units when prices are low and fewer when prices are high, reducing your average cost per unit over time.

The Power of Consistency

Consider this: investing $500/month at 12% returns for 20 years yields approximately $495,000. Investing the same amount for 30 years yields approximately $1.75 million. The extra 10 years of compounding adds over $1.25 million—this is why starting early matters more than the amount you invest.

Choosing the Right SIP Amount

Financial advisors recommend investing 15-20% of your income. Start with what's comfortable and increase your SIP amount annually (step-up SIP). Even a 10% annual increase in your SIP amount can double your final corpus compared to keeping the amount constant.

SIP Calculator FAQs

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Marcus Chen

Financial Analysis Specialist

Marcus has over 12 years of experience in quantitative finance and personal financial planning. He specializes in loan analysis, investment modeling, and consumer debt strategies. His methodologies incorporate industry-standard financial mathematics used by major lending institutions.

Content reviewed: January 2026Next review scheduled: 2027

Editorial Standards: All calculations use industry-standard financial formulas. Content is reviewed for mathematical accuracy and updated to reflect current market conditions. This tool provides estimates for informational purposes and does not constitute financial advice.