About this tool
A SIP calculator does one honest thing and is usually asked to do a dishonest one. The honest thing is arithmetic: given a monthly amount, an assumed rate and a number of years, here is what compounding produces. The dishonest thing is treating the output as a forecast, which it is not, because the rate you typed was a guess.
So read the two numbers together. The amount you actually put in is certain: five thousand a month for ten years is six lakh, and no market can change that. The projected value is conditional on an assumption you made. The distance between them is the part that might or might not arrive.
The structure of compounding is worth understanding before you trust any output. Your first instalment has the entire tenure to grow; the one you pay in the final month has thirty days. This is why a longer horizon does so much more than a larger amount, and why the curve looks flat for years and then steepens. It is also why pausing a SIP early is expensive in a way that pausing it late is not: the instalments you skip in year two were the ones with the most time left to work.
One correction worth making yourself: this figure ignores inflation. Twenty lakh in twenty years does not buy twenty lakh of today’s things. Subtracting your inflation guess from your return guess before you type it gives a number in today’s money, which is a good deal more sobering and a good deal more useful.
The calculation runs on your device. Nothing about your money is sent anywhere.
How to use this tool
- Enter your monthly amount. What you would put in each month, every month, without missing one. That last part is the assumption doing most of the work.
- Choose a return to assume. This is your assumption, not a rate anyone is offering you. Long-run Indian equity is often modelled at 10–12%; debt funds a good deal lower.
- Set the number of years. Anything up to fifty. Run it two or three times with different numbers rather than trusting one.
- Compare the two figures. What you put in, and what it might become. Early on those numbers are close together. It is the last third of a long horizon where they separate.
What this tool does not do
- It assumes a constant return, which no market has ever delivered.
- It assumes every instalment is paid, on time, for the full period.
- Inflation, expense ratio, exit load and capital gains tax are all excluded.
- It does not model a step-up SIP, a lump sum, or withdrawals along the way.
- This is arithmetic, not advice. It cannot tell you whether to invest, or in what.
Common questions
What formula is this?
Future value of an annuity due: FV = P × ((1+i)^n − 1) / i × (1+i), with i the monthly rate and n the number of instalments. The trailing (1+i) is there because a SIP instalment goes in at the start of the month, not the end. Calculators that leave it out understate the result by roughly one month's growth.
Is 12% a realistic return to assume?
It is a common modelling figure for Indian equity over long periods, not a promise and not an entitlement. Real returns arrive unevenly: a good decade and a flat one average out to a number that neither decade resembled. Try the same calculation at 8% and at 14% and treat the spread, rather than any single figure, as the answer.
Why is the projected value so much higher than what I put in?
Compounding weighted by time. Your first instalment compounds for the whole tenure; your last compounds for a month. That is also why the same total invested over twenty years beats the same amount squeezed into ten: the early money does the work.
Does this account for inflation?
No. The figure is in today's rupees at tomorrow's prices, which is to say it flatters. A rough correction is to subtract inflation from your assumed return: model 12% as 6% and you get something closer to what the money will actually buy.
What about exit load, expense ratio and tax?
None of them. Expense ratios come out of the fund's returns before you see them, so an assumed 12% net of expenses is more honest than 12% gross. Capital gains tax applies when you redeem, at rates that depend on the fund type and holding period.
What if I stop paying for a few months?
Then the result is wrong, and by more than you would guess. This assumes every instalment lands. A SIP paused for a year in year two costs far more at the end than one paused in year fifteen.