SIP Calculator

What is SIP (Systematic Investment Plan)?

A Systematic Investment Plan (SIP) is a simple way to invest in mutual funds by putting in a fixed amount at regular intervals—usually monthly—instead of investing a big lump sum at once. Think of it like setting up an automatic savings habit that also grows your money.

SIPs work on two ideas: Rupee Cost Averaging (you buy more units when prices are low and fewer when prices are high, lowering your average cost) and the Power of Compounding (your returns start earning returns the longer you stay invested).

Quick example: If your SIP is ₹5,000 and the fund NAV is ₹50 this month, you get 100 units. If next month the NAV is ₹25, you get 200 units. Over time, your average cost per unit goes down, and compounding does the heavy lifting.

How Does a SIP Work? (Example Explained)

Suppose you invest ₹5,000 every month for 10 years in an equity mutual fund and the average annual return is ~12%.

• Total Invested: ₹5,000 × 12 × 10 = ₹6,00,000
• Estimated Future Value: ~₹11.6 lakh

Why it works: each month’s contribution grows for a different number of years, but together they build a solid corpus. Early installments get more time to compound; later ones get less time—but you keep accumulating.

Relatable analogy: Plant one sapling every month. The first has 10 years to grow, the last only a month. In the end, you’ve grown a mini-forest.

Benefits of SIP

• Builds a habit: Money is auto-debited and invested before you spend it. Example: Raj sets a ₹5,000 SIP for the 5th of every month and never “forgets” to invest.
• No market timing: You invest through ups and downs. Example: Priya’s SIP bought more units during a dip; when markets recovered, her portfolio bounced faster.
• Start small: Begin with ₹500–₹1,000. Example: A student starts ₹1,000/month; by 30, that head start really shows.
• Compounding edge: More years = bigger snowball. Example: ₹5,000/month for 20 years @12% ≈ ₹50 lakh.
• Flexible: Increase, decrease, pause, or stop anytime. Example: Ramesh steps up SIP by 10% each year after salary hikes.
• Emotion control: Fixed, periodic investing reduces panic and FOMO.

Types of SIPs in India

• Regular SIP: Fixed amount on a fixed date (e.g., ₹5,000 on the 10th).
• Top-Up (Step-Up) SIP: Auto-increase your SIP periodically (e.g., +10% each year).
• Flexible SIP: Change the amount as per your cash flow (higher in bonus months, lower in tight months).
• Perpetual SIP: No end date; runs until you stop it.
• Trigger SIP: Starts/adds based on conditions (e.g., index falls 5%); best for advanced users.

When Should You Start a SIP?

The best time was yesterday. The second best is today.

• 20s: Time is your superpower. Example: ₹2,000/month from 25 to 60 @12% ≈ ~₹1.3 crore.
• 30s–40s: Balance goals like home, kids, and retirement. Example: ₹10,000/month from 35 to 60 @12% ≈ ~₹1.9 crore.
• 45+: Still valuable for retirement/wealth stability. Example: ₹20,000/month for 15 years @10% ≈ ~₹83 lakh.

SIP Returns by Fund Type (Estimated)

Fund Type	Risk	Expected Return	Best Use Case (Example)
Equity Funds	High	~10–15% p.a.	Retirement in 15–25 yrs; wealth creation
Debt Funds	Low	~5–8% p.a.	Short/medium-term parking, stability
Hybrid Funds	Medium	~8–11% p.a.	Buying a house in 7–10 yrs; balanced growth
Index Funds	Medium	~10–12% p.a.	Low-cost passive long-term investing
ELSS (Tax-Saving)	High	~12–15% p.a.	80C tax-saving + long-term growth

Note: These are broad, historical ranges—not guarantees. Pick fund types based on your risk and goal timeline.

How This SIP Calculator Works

The standard formula to estimate SIP maturity value is:

FV = P × [ (1 + r)^n – 1 ] × (1 + r) / r

Where: P = monthly investment, r = monthly return (annual ÷ 12 ÷ 100), n = total months.

Example: ₹5,000/month, 10 years, 12% p.a. → r = 1% per month, n = 120. Result ≈ ₹11.6 lakh.

Step-up example: If you increase your SIP by 10% every year, the corpus for the same 10 years can be ~₹15 lakh (because you invest more each year).

About the FinSarthi SIP Calculator (Features & How to Use)

The FinSarthi SIP Calculator is built for Indian investors who want clarity, speed, and practical planning.

Key Features

• Instant results: See maturity value, total invested, and total gains in real time.
• Step-Up SIP: Model annual increases (e.g., +5%, +10%) to mirror salary growth.
• Goal-based planning: Enter a target amount and timeline; we’ll estimate the required SIP.
• Inflation-aware: Adjusts your goal to future value so you don’t fall short in real terms.
• Breakup charts: Invested vs. corpus, monthly growth visualizations for better understanding.
• Schedule view: Optional year-by-year/month-by-month snapshot of how your corpus builds.
• Export & share: Download a CSV of your schedule and share a link with prefilled inputs.
• Mobile-friendly UI: Clean, fast, and usable on any device.
• Privacy-first: We don’t store your inputs; all calculations run in-browser.
• Clear disclaimers: “Returns are market-linked; results are estimates, not guarantees.”

How to Use (Step-by-Step)

1. Enter your monthly SIP amount, expected annual return, and duration (years/months).
2. (Optional) Add a step-up rate if you plan to increase your SIP every year.
3. (Optional) Switch to Goal mode: enter your goal amount and inflation; we estimate the SIP needed.
4. Review maturity value, total invested, gains, and the chart.
5. Download the CSV schedule for your records or share a link with your advisor/family.

SIP vs Lumpsum – Which One’s Better?

There’s no single “best” choice—it depends on your situation and market conditions.

• Lumpsum: Invest a big amount at once; more time in the market can mean higher returns, but timing risk is higher. Example: ₹6 lakh invested today for 10 years @12% ≈ ₹18.6 lakh.
• SIP: Spread your investment; reduces timing risk and is easier for salaried investors. Example: ₹5,000/month for 10 years @12% ≈ ₹11.6 lakh.

For most beginners and regular earners, SIP is smoother and less stressful. If you get a bonus, you can combine both: keep your SIP and add a lumpsum on dips.

Common Myths About SIP – Busted

• ❌ SIP is only for small investors. Truth: Even large investors use SIP for discipline.
• ❌ You can’t lose money in SIP. Truth: Markets can fall; SIP reduces risk, not eliminates it.
• ❌ SIP is a mutual fund type. Truth: SIP is a method of investing in any fund.
• ❌ SIP always gives 12%. Truth: Returns vary with the market and fund you choose.

FAQs on SIP (Expanded)

1) Is SIP good for beginners?

Yes. It’s automated, low effort, and removes the need to time the market. Start small and build confidence.

2) Can I change my SIP amount later?

Yes. You can increase, decrease, pause, or stop. Many platforms also allow step-up SIPs (+5–10% yearly).

3) Is SIP risk-free?

No. Risk depends on the fund (equity, hybrid, debt). SIP manages timing risk but doesn’t guarantee returns.

4) Can I stop my SIP anytime?

Yes. Stopping future installments doesn’t lock your existing units (except ELSS, which has a 3-year lock-in).

5) What’s the ideal duration for a SIP?

For equity funds, at least 3–5 years; ideally 10+ years for meaningful compounding.

6) Do SIPs offer tax benefits?

Only SIPs in ELSS funds qualify for Section 80C (up to ₹1.5 lakh/year). Other funds don’t offer upfront tax deductions.

7) Can I withdraw SIP investments anytime?

Yes, except ELSS (3-year lock-in per installment). Check exit loads if redeeming early.

8) Which date is best for SIP?

There’s no “magic” date. Pick a date close to your salary credit so cash flow stays smooth.

9) Which funds are best for SIP?

Choose as per your risk and goal: large-cap or index (steady), flexi-cap (balanced), mid/small-cap (higher risk/reward), hybrid (balanced), debt (stability).

10) What if markets fall after I start?

Keep the SIP running. Falling markets mean your fixed amount buys more units, which helps when markets recover.

11) Direct vs Regular plan—what should I choose?

Direct plans have lower expense ratios (higher long-term returns) but you invest yourself. Regular plans include distributor support. Pick what suits you.

12) Growth vs IDCW (Dividend)—which is better for SIP?

For long-term wealth creation, Growth is generally preferred because returns stay invested and compound.

13) One big SIP or multiple SIPs across funds?

Diversifying across 2–3 suitable funds is sensible (e.g., an index fund + a flexi-cap + a hybrid). Avoid over-diversification.

14) Can I use SIP for short-term goals (under 3 years)?

For short term, consider debt or conservative hybrid funds via SIP. Equity SIPs are better for 5+ year goals.

15) How does taxation work on SIP redemptions?

Tax depends on fund type and holding period. Equity: long-term gains are largely tax-efficient beyond 1 year. Debt: taxed as per prevailing rules. (Consult a tax advisor.)

Final Thoughts – Why You Should Start a SIP Today

SIP is more than an investment—it's a habit that builds your future. Start with what you can afford, increase it as income grows, and stay consistent. Time and compounding will do the rest.

Use the FinSarthi SIP Calculator above to test different amounts, durations, and step-ups. Set a goal, make a plan, and get started today.