What is a SIP?
SIP (Systematic Investment Plan) is a methodology of investing a fixed amount of money at regular intervals in a mutual fund scheme. SIP allows you to build wealth over the long term by investing regularly without attempting to time the market.
By investing a fixed amount monthly, you buy more mutual fund units when the NAV (price) is low, and fewer units when the NAV is high. This process averages out the purchase cost over time, a concept known as Rupee Cost Averaging.
How the SIP calculator works
Most online calculators approximate returns by dividing the annual interest rate by 12. This calculator uses the precise, mathematically correct compound conversion formula:
M = P × [((1 + i)^n − 1) / i] × (1 + i)
Where:
Total corpus accumulated
Instalment paid each month
Derived as (1 + r)^(1/12) - 1
Tenure in years multiplied by 12
The correct monthly rate calculation represents how mutual funds actually compile returns in the Indian market, ensuring your projections align closely with real-world statements. If you already hold a lumpsum alongside this SIP, use the Wealth Growth Calculator to project the combined corpus, including the year your returns overtake your contributions.
Types of SIPs in India
Regular SIP
Invests the exact same amount on a fixed date every month. The simplest and most popular option.
Step-up / Top-up SIP
Automatically increases your monthly contribution by a set percentage or amount every year. Highly effective for aligning investments with annual salary hikes.
Flexi SIP
Allows you to adjust the monthly investment amount depending on your financial cash flows or market conditions.
Perpetual SIP
Has no fixed end date, continuing automatically until the investor requests a cancellation.