How a SIP calculator works, explained
A SIP (systematic investment plan) means investing a fixed amount at a regular interval, usually every month, into a mutual fund or ETF. A SIP calculator projects what those contributions grow into at an assumed average return. This one also shows the two things most calculators leave out: fund fees and inflation, and it lets you test other scenarios next to your own.
The SIP formula
M = P × ( [ (1 + i)n − 1 ] ÷ i ) × (1 + i)
M is the maturity value, P the monthly amount, n the number of monthly contributions and i the monthly rate. The last factor (1 + i) makes it an annuity due: every contribution is made at the start of the month and earns a full month of return, which is how a SIP debit works in practice.
Why the monthly rate is not the yearly rate divided by 12
Compounding 1% a month for 12 months gives 12.68% a year, not 12%. To model a true 12% yearly return the monthly rate has to be (1.12)^(1/12) − 1 = 0.9489%:
i = (1 + yearly return)1/12 − 1
This calculator uses that effective monthly rate, so 12% really means 12% a year. Calculators that use 12% ÷ 12 show somewhat higher results for the same input. Example: ₹1,000 a month for 12 months at 12% grows to ₹12,766 on ₹12,000 invested.
Worked example: ₹5,000 a month for 10 years at 12%
- Flat SIP: ₹6,00,000 invested grows to about ₹11.2 lakh.
- 10% yearly step-up: ₹9,56,245 invested grows to about ₹16.3 lakh, roughly 46% more.
- 1% expense ratio: the flat SIP ends at about ₹10.6 lakh, so the fee costs about ₹58,000.
- 6% inflation: ₹11.2 lakh in 10 years buys what about ₹6.3 lakh buys today.
Step-up SIP: the biggest lever you control
A step-up (or top-up) SIP raises the monthly amount by a fixed percentage every year, often 5 to 10% to follow salary growth. The extra money arrives gradually, yet it compounds with everything else, which is why the step-up line in the “same money, other plan” comparison pulls away so clearly over long horizons.
The cost of starting later
Time does more work than the monthly amount. ₹5,000 a month at 12% for 20 years grows to about ₹46.0 lakh on ₹12 lakh invested. Start five years later with the same end date and you reach about ₹23.8 lakh on ₹9 lakh invested: a quarter less money in, but roughly half the result. The “you start later” bars show this for your own numbers.
What the expense ratio really costs
The expense ratio is the yearly fee a fund takes from its value. The calculator runs your plan twice, with and without the fee, and shows the difference as fee drag; the dashed orange line on the chart is the fee-free path. In Europe, €250 a month for 20 years at 7% ends near €124,700 with a 0.2% index fund, but near €107,700 with a 1.5% active fund: about €20,000 in fees on €60,000 of contributions.
Inflation and real value
Real value = Nominal value ÷ (1 + inflation)years
A large number decades away sounds impressive, but what matters is what it buys. The purple dashed line and the “worth in today’s money” card convert the total back to current prices.
SIP or lumpsum?
If you already hold the money and markets rise steadily, a lumpsum wins because every euro or rupee is invested for longer: ₹6 lakh invested on day one at 12% grows to about ₹18.6 lakh in 10 years, against ₹11.2 lakh when the same ₹6 lakh is spread over 120 months. A SIP wins in practice because it matches how people earn, removes the need to time the market and averages the purchase price through ups and downs. Many people do both: invest what they have now and keep a monthly plan running.
Choosing a realistic return
There is no guaranteed figure. Long-run assumptions people commonly use are around 10 to 13% for Indian equity funds and 6 to 8% for global equity in developed-market currencies, with bond funds lower. Real returns arrive unevenly, so check the “return is different” bars: if your plan only works at the optimistic end, it is fragile.
Why your real result will differ
The model assumes the same return every year. Real markets have strong years, flat years and crashes, and the order matters: a fall early in a SIP lets you buy cheaply for years, a fall near the end hurts more. Taxes, exit loads, transaction costs, tracking error and currency moves are not included. Taxes depend on your country, account type (for example 401(k), IRA, ISA, SIPP, PEA) and holding period, and the rules change, so check them separately.
XIRR is for looking back
XIRR measures the yearly return you actually earned on cash flows made on different dates, which is the right way to judge a SIP you already have. This calculator does the opposite job: it projects forward from a return you assume.
India, Europe, US and UK
“SIP” is Indian terminology, but the mechanism is universal: a monthly ETF savings plan (Sparplan in Germany and Austria), dollar-cost averaging into a 401(k), IRA or brokerage account in the US, and monthly Stocks & Shares ISA or SIPP contributions in the UK. Indian amounts use the lakh/crore format.
How this compares to a typical SIP calculator
| Feature | Typical SIP calculator | This calculator |
|---|
| SIP, lumpsum and step-up | Often separate pages | One page, three tabs |
| Lumpsum plus monthly SIP | Rarely | Yes |
| Expense ratio (fee drag) | Usually excluded | Modelled and shown |
| Inflation-adjusted value | Rarely | Yes, on chart and cards |
| What-if scenarios | No | Start later, other return, other plan |
| Goal planner | Separate tool | Monthly amount and time to goal |
| Year table and CSV | Rarely | Yes |
| Shareable link | No | Yes |
Goal planning: how much per month for ₹1 crore?
The goal planner solves backwards for the monthly amount, using your return, period, fee and step-up. At 12% without fees, ₹1 crore in 20 years needs about ₹10,900 a month; in 10 years it needs about ₹44,600 a month. It also tells you how long your current plan needs to get there.
Share a scenario with URL parameters
The address bar updates once you change an input, so a copied link reopens the exact scenario. Example: ?amount=5000&rate=12&years=10. Optional: mode (sip, lumpsum, stepup), lump, stepup, er, infl, currency (INR, EUR, USD, GBP) and goal.
Privacy
Every calculation runs in your browser. The page makes no network requests with your numbers; only the anonymous, cookie-free page-view counter loads from Simple Analytics.
Not financial advice
This is an educational calculator that does arithmetic on the assumptions you enter. It does not know your income, debts, taxes or risk tolerance and cannot predict markets. Talk to a regulated adviser before committing to a plan.