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SIP Calculator

Calculate your mutual fund SIP returns with compound interest.

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Understanding SIP (Systematic Investment Plan)

A Systematic Investment Plan (SIP) is a disciplined investment approach where you invest a fixed amount regularly in mutual funds. Instead of trying to time the market, SIP allows you to benefit from rupee-cost averaging and compound interest.

Key Benefit: Rupee Cost Averaging

When markets are high, your fixed investment buys fewer units. When markets are low, it buys more units. This reduces the impact of volatility on your average cost per unit.

Power of Compounding

Over time, your investment earns returns on returns. A ₹500/month SIP at 12% annual return for 20 years grows to over ₹3.3 lakhs, with ₹1.8 lakhs coming from compound interest.

Flexibility & Discipline

Start with any amount (₹100-₹10,000+), pause/resume anytime, and increase your SIP with step-up features. It enforces disciplined investing without market timing pressure.

Reduces Emotional Decisions

By investing fixed amounts regularly, you avoid emotional decisions during market peaks or crashes. This systematic approach has proven superior to lump-sum investing for most retail investors.

SIP vs Lump Sum Investment Comparison

Factor SIP Investment Lump Sum Investment
Investment Method Fixed amount monthly/quarterly Large amount all at once
Cost Averaging ✅ Rupee cost averaging reduces risk ❌ Buys at single market price point
Market Timing Risk ✅ Low risk from timing ❌ High if market falls after investment
Discipline Required ✅ Enforces regular investing ❌ One-time decision, needs lump sum
Returns (Long Term) Good and consistent growth Can be higher in bull markets
Best For Regular salary earners, long-term goals Large bonuses, inheritance, surpluses
Pro Tip: Many successful investors use a hybrid approach: SIP for monthly savings + occasional lump sum when bonuses arrive. This combines the benefits of both strategies.

What is Step-up SIP (Escalating SIP)?

Step-up SIP allows you to increase your monthly investment amount by a fixed percentage every year. This aligns with salary growth and helps you build wealth faster over time.

Example Calculation:

Initial SIP: ₹5,000/month

Step-up: 10% yearly increase

Year 1: ₹5,000/month

Year 2: ₹5,500/month (5,000 × 1.10)

Year 3: ₹6,050/month (5,500 × 1.10)

Benefits of Step-up SIP:
  • Wealth Acceleration: Increases your wealth accumulation significantly as your income grows
  • Natural Progression: Step-up matches your salary increment cycle (typically annual)
  • Inflation Hedge: Increasing investment naturally combats inflation over long periods
  • Flexibility: You can skip, pause, or modify step-up based on your financial situation
  • Long-term Goals: Perfect for retirement planning, children's education, or major life goals
Note: Using step-up SIP, the same ₹5,000 base investment with 10% annual increases over 20 years can accumulate to ₹80-90 lakhs at 12% returns, compared to ₹30 lakhs with a fixed SIP.

How Much Should You Invest via SIP?

There's no fixed rule for SIP investment amount - it depends on your income, goals, and financial capacity. However, here are some guidelines to help you decide the right SIP amount for your situation.

Monthly Income Recommended SIP Amount (10-15%) Conservative (5%) Aggressive (20%)
₹25,000 ₹2,500 - ₹3,750 ₹1,250 ₹5,000
₹50,000 ₹5,000 - ₹7,500 ₹2,500 ₹10,000
₹75,000 ₹7,500 - ₹11,250 ₹3,750 ₹15,000
₹1,00,000 ₹10,000 - ₹15,000 ₹5,000 ₹20,000
₹1,50,000 ₹15,000 - ₹22,500 ₹7,500 ₹30,000
Key Principles for SIP Amount:
  • Affordability First: Choose an amount you can sustain for 10+ years without impacting essential expenses
  • Pay Yourself First: Invest before spending on discretionary items (entertainment, dining out)
  • Flexibility: Start small if needed (₹500-₹1,000) and increase gradually with step-up
  • Emergency Fund: Keep 6 months of expenses liquid before starting SIP
  • Multiple Goals: Allocate SIP amounts to different funds based on goals (retirement, education, wealth building)
💡 Pro Tip: Even starting with ₹500/month consistently beats not investing at all. A ₹500 SIP for 30 years at 12% returns grows to ₹50+ lakhs. The key is starting early and staying disciplined.

Expected SIP Returns by Time Period

Understanding how long your SIP needs to run to achieve meaningful returns helps with financial planning. The power of compounding becomes evident over longer periods. These calculations assume 12% average annual returns.

Monthly SIP 5 Years 10 Years 15 Years 20 Years 30 Years
₹500 ₹31,066 ₹87,435 ₹1,98,325 ₹3,97,656 ₹13,06,563
₹1,000 ₹62,133 ₹1,74,870 ₹3,96,650 ₹7,95,312 ₹26,13,126
₹5,000 ₹3,10,665 ₹8,74,350 ₹19,83,250 ₹39,76,560 ₹1,31,06,630
₹10,000 ₹6,21,330 ₹17,48,700 ₹39,66,500 ₹79,53,120 ₹2,62,13,260

Note: These calculations assume consistent 12% annual returns and no step-up. Actual returns vary based on market conditions and fund selection. Even conservative 10% assumptions show significant wealth accumulation over 20-30 years.

Choosing the Right Mutual Fund Category for SIP

Different mutual fund categories suit different investment goals and risk profiles. Here's a guide to selecting the right category for your SIP.

Equity Funds

Risk: High | Return: 10-15% | Time Horizon: 10+ years

Best for long-term wealth creation. Includes large-cap (stable), mid-cap (growth), and small-cap (aggressive). Ideal for retirement or 20+ year goals.

Balanced/Hybrid Funds

Risk: Medium | Return: 8-11% | Time Horizon: 7-10 years

Mix of equity (60-70%) and debt (30-40%) for balance. Good for moderate goals like education in 10 years or intermediate wealth building.

Debt Funds

Risk: Low | Return: 5-7% | Time Horizon: 3-7 years

Invest in bonds and fixed-income securities. Lower volatility, stable returns. Good for medium-term goals or risk-averse investors.

Liquid Funds

Risk: Very Low | Return: 4-5% | Time Horizon: <1 year

Highly liquid, safe parking for short-term money. Better than savings account. Use as emergency fund or temporary investment.

Recommended SIP Portfolio Mix:
  • For 25-year-old (40-year horizon to retirement): 80% Equity (Large-cap + Mid-cap) + 20% Balanced Funds
  • For 35-year-old (25-year horizon to retirement): 70% Equity + 30% Balanced Funds
  • For 45-year-old (15-year horizon to retirement): 50% Equity + 40% Balanced + 10% Debt
  • For 55-year-old (10-year horizon to retirement): 30% Equity + 40% Balanced + 30% Debt
Key Insight: Most investment advisors recommend a diversified portfolio across different fund categories rather than investing in a single fund. Diversification reduces risk while maintaining growth potential.

Frequently Asked Questions

A Systematic Investment Plan (SIP) is an investment method where you invest a fixed amount regularly (usually monthly) in mutual funds. Instead of trying to time the market, SIP allows you to invest disciplined amounts regardless of market conditions, benefiting from rupee-cost averaging and compound interest over time. This approach is ideal for salary earners who want long-term wealth accumulation.

Rupee-cost averaging means when markets are high, your fixed investment buys fewer units; when markets are low, it buys more units. Over time, this averages out your cost per unit and reduces the impact of market volatility. For example, ₹5,000/month invested over 10 years helps you buy more units during downturns and fewer during peaks. This mathematical benefit makes SIP superior to lump sum investing during volatile market cycles.

SIP involves regular fixed investments over time (disciplined approach), while lump sum is investing a large amount all at once. SIP reduces market timing risk and enforces discipline, making it ideal for regular salary earners. Lump sum can generate higher returns in bull markets but carries timing risk if invested just before a market crash. Many successful investors use both strategies together - SIP for regular savings and lump sum for bonuses or windfall gains.

Step-up SIP (escalating SIP) increases your monthly investment by a fixed percentage yearly, typically matching salary increments (5-10% annually). Starting with ₹5,000/month and 10% step-up, Year 2 becomes ₹5,500, Year 3 becomes ₹6,050, and so on. This significantly accelerates wealth accumulation as your income grows, combats inflation, and is perfect for long-term goals like retirement or children's education. Many funds allow easy step-up modifications.

You can start SIP with any amount - typically ₹100 to ₹10,000+ per month depending on your budget. A common rule is to invest 10-15% of your monthly income. Starting early with even ₹500/month at 12% returns for 30 years grows to ₹50+ lakhs. The key is consistency and long-term commitment rather than the investment amount. Many people start small and increase with step-up as their income grows. Remember: starting small is better than not starting at all.

Expected annual returns vary by fund type: Large-cap equity funds deliver 10-12%, Mid-cap/Small-cap: 12-15%, Balanced funds: 8-10%, Debt funds: 5-7%. Historically, equity SIPs have delivered 10-12% average returns over 10+ year periods. Use conservative estimates (10-12%) for financial planning to be safe. Remember, past performance doesn't guarantee future results. Consider your risk tolerance and time horizon when selecting expected returns for calculations.

SIP works best for long-term goals (10+ years). The longer you stay invested, the more compound interest works in your favor. A ₹500/month SIP: 5 years = ₹31,000 (at 12% return), 10 years = ₹87,000, 20 years = ₹330,000. For retirement planning or children's education (15-30 year horizon), SIP provides substantial wealth accumulation. Short-term SIPs (1-3 years) may not fully benefit from compounding and can be impacted by market volatility. Maintain discipline even during market downturns - that's when SIP benefits most.

Yes, most mutual fund SIPs offer flexibility. You can pause your SIP for 3-6 months (called SIP holiday), resume anytime, or stop completely without penalties. However, exiting early before 5-7 years may mean missing compound growth and potentially incurring exit loads if redeemed within 1 year. Plan SIP for long-term goals and maintain discipline - pausing during market downturns defeats the purpose of SIP's cost-averaging benefit. Use this flexibility for genuine emergencies, not market timing.
SIP Investment Tips
  • Start Early: Even ₹500/month can grow to ₹50+ lakhs in 30 years at 12% returns
  • Stay Invested: Long-term SIP (10+ years) significantly smooths market volatility
  • Diversify Funds: Don't put all SIP in one fund; spread across equity, debt, balanced categories
  • Use Step-up: Increase SIP by 5-10% yearly to match salary growth
  • Check Expense Ratios: Lower expense ratios (0.5-1%) mean higher net returns over time
  • Rebalance Annually: Review & rebalance portfolio yearly to maintain target allocation
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Important Disclaimer
This SIP calculator provides estimates for educational purposes based on assumed returns. Actual mutual fund returns depend on market performance, fund selection, and economic conditions. Past performance does not guarantee future results. Always consult with a qualified financial advisor before making investment decisions. We are not responsible for any financial losses or decisions made based on this tool.