How to use this Understanding Systematic Investment Plans (SIP) calculator
A Systematic Investment Plan (SIP) is a disciplined investment strategy offered by mutual funds to investors. It allows you to invest a fixed amount of money at regular intervals—typically monthly—rather than making a lump-sum investment. Our SIP calculator projects exactly how this disciplined approach converts small monthly savings into massive wealth over long horizons.
Mathematical Formula & Logic
M = P × ({[1 + i]^n - 1} / i) × (1 + i). Where M is the maturity amount, P is monthly investment, i is monthly interest rate, and n is total months.
Key Calculation Assumptions
- Calculations assume fixed compounding frequencies unless custom compounding is selected.
- Results do not factor in unannounced statutory tax rate adjustments or customized bank penalty fees.
- Calculations serve educational decision-making and planning purposes.
Frequently Asked Questions (FAQs)
What is a Step-Up SIP?
A step-up SIP automates increasing your monthly SIP contribution by a fixed percentage every year. It matches your investments with your salary growth, often doubling the ultimate wealth generated compared to a flat SIP.
How much return should I expect?
Historically, large-cap Indian equity mutual funds estimate 10-12% annual returns, while mid and small caps might project 12-15% (with higher risk). Debt mutual funds typically yield 6-8%.
What happens if I miss an SIP installment?
Mutual funds do not penalize you directly for missing an installment, though your bank may charge an ECS bounce fee. Your existing accumulated corpus stays invested and continues to compound.