How the sip calculator works
A Systematic Investment Plan (SIP) invests a fixed amount at regular intervals, letting your returns compound over time. ToolHub's SIP calculator uses the standard future-value-of-annuity formula:
Where P is your monthly investment, i is the monthly rate of return (annual rate ÷ 12), and n is the total number of monthly instalments.
Step-by-step guide
- Enter how much you plan to invest every month.
- Set the annual return you expect the fund to deliver (equity mutual funds have historically averaged 10–15% over the long term, but returns are never guaranteed).
- Choose your investment horizon in years.
- Read the projected future value, total invested amount, and estimated gains instantly.
SIP vs lumpsum: why the monthly amount matters
Because a SIP spreads purchases across market highs and lows, it averages your purchase cost over time (rupee-cost averaging), which can smooth out volatility compared to investing everything at once. The trade-off is that a SIP invests less money earlier, so in a strongly rising market a lumpsum can outperform — while in a volatile or falling market, a SIP often has the advantage.
Example calculation
A ₹5,000 monthly SIP at an assumed 12% annual return for 10 years grows to roughly ₹11.6 lakh from a total investment of ₹6 lakh — an estimated gain of about ₹5.6 lakh, illustrating how compounding accelerates in the later years of a long SIP.