What is a SIP?
A SIP, or systematic investment plan, is a way to invest a fixed amount in a mutual fund at regular intervals, usually every month. The money moves from your bank account automatically on a date you choose, and the fund gives you units at that day’s price (NAV).
A SIP is not a type of fund. It’s a way of investing in almost any mutual fund, whether equity, debt or hybrid. Most people use SIPs because they fit a monthly salary and build a habit: you invest first and spend what is left.
How to use this SIP calculator
- Monthly investment: the amount you plan to invest every month. You can type an exact amount or use the slider.
- Investment period: how many years you plan to keep investing.
- Return you assume: the yearly return you want to test. Try a few to see a range, because real returns will vary.
The calculator shows how much you would put in, your estimated gains and the total value. The chart and table below it show the same thing year by year, so you can see how growth speeds up in the later years.
The SIP formula
The calculator assumes you invest at the start of every month and your money grows at a steady rate. The future value of a SIP is:
FV = P × [((1 + i)ⁿ − 1) ÷ i] × (1 + i)
- P is the monthly investment
- i is the monthly rate of return
- n is the number of monthly instalments
We convert your yearly return into the equivalent monthly rate, so 12% a year becomes about 0.949% a month. Some calculators simply divide by 12 (1% a month), which gives a slightly higher result.
A worked example
Say you invest ₹10,000 a month for 15 years and assume 12% a year.
| Item | Amount |
|---|---|
| Total invested (180 instalments) | ₹18,00,000 |
| Estimated value after 15 years | ₹47,59,314 |
| Estimated gains | ₹29,59,314 |
More than 60% of the final value comes from growth, not from what you put in, and most of that growth happens in the last few years. That’s compounding at work, and it’s why starting early matters more than starting big.
Why SIPs work for most people
- Rupee cost averaging. You buy more units when prices are low and fewer when they are high. Over time, this smooths out the price you pay.
- No need to time the market. Nobody knows the best day to invest. A SIP takes that question away.
- Discipline. The money is invested before you can spend it.
- Flexible. You can start small, step it up as your income grows, and pause if you need to.
Things to keep in mind
- Returns are not steady. Equity funds can fall 20% or more in a bad year. A SIP works best if you keep going through those years.
- Inflation. ₹47 lakh in 15 years will buy less than ₹47 lakh today. Our inflation calculator shows how much less.
- Step it up. Raising your SIP by even 10% a year can make a large difference. Try the step-up SIP calculator.
- Start with the goal. If you know what you are saving for, the goal SIP calculator works backwards to the SIP you need.
From SIP to a monthly income
A SIP builds your savings. Later, a systematic withdrawal plan (SWP) can turn those savings into a monthly income while the rest stays invested. That’s the idea behind Bridgit Second Income: build for about 10 years, then draw about 3.5% a year. You can test the withdrawal side with our SWP calculator.
