How SIP returns are calculated
Updated: 14 November 2026
An educational illustration, not financial, tax or investment advice. Figures are estimates from the formula shown. Your bank, fund house or the official scheme rules decide the actual amount.
SIP returns are worked out month by month. Each instalment buys units, and every rupee already invested keeps growing at the return you assume. This page shows the formula, a worked example and the mistakes people make when reading a SIP result.
Quick answer
- A SIP (systematic investment plan) invests a fixed amount every month in a mutual fund.
- ₹5,000 a month for 15 years at an assumed 12% a year grows to about ₹25,22,880. You put in ₹9,00,000.
- A 10% yearly step-up on the same SIP takes it to about ₹43,41,925.
- Real fund returns go up and down. The calculator shows one steady-return path, not a promise.
The formula behind a SIP
The SIP calculator assumes you invest at the start of every month and that the money earns the yearly return ÷ 12 each month. With a fixed monthly amount P, a monthly rate i and n months:
Value = P × [((1 + i)n − 1) ÷ i] × (1 + i)
The last “× (1 + i)” is there because each instalment goes in at the start of the month and earns that month’s return too.
Worked example: ₹5,000 a month for 15 years
| Scenario | You invest | Estimated value |
|---|---|---|
| ₹5,000 a month, 12% a year, 15 years | ₹9,00,000 | ₹25,22,880 |
| Same, but a 10% step-up every year | ₹19,06,349 | ₹43,41,925 |
| Same SIP, only 10 years | ₹6,00,000 | ₹11,61,695 |
| Same SIP, 15 years, at 8% a year | ₹9,00,000 | ₹17,41,726 |
Two things stand out. Time matters more than the monthly amount: the last five years add more than the first ten. And the assumed return changes the answer a lot, so try a cautious rate as well as a hopeful one.
What a step-up SIP does
A step-up (or top-up) SIP raises the monthly amount by a fixed percentage once a year, often in line with a salary hike. In the example, raising ₹5,000 by 10% each year means you invest about twice as much in total, and the value grows by about 1.7 times. Enter the percentage in the step-up box to see the yearly table.
How to use the SIP calculator
- Open the SIP calculator and enter your monthly amount.
- Enter an expected yearly return. Try two or three rates, not one.
- Enter the years, and a step-up if you plan to raise the SIP.
- Read the estimated value, the amount invested and the gain. Open the yearly table to see the growth.
Mistakes to avoid
- Reading the result as a promise. Equity funds can fall for years. The figure is before fund charges and tax.
- Comparing a SIP with CAGR. CAGR suits one-time money. For a SIP, where money goes in on many dates, the fair measure of what you actually earned is XIRR. See how to calculate CAGR.
- Forgetting inflation. ₹25 lakh in 15 years will buy far less than ₹25 lakh today. The inflation calculator shows how much less.
Choosing between a SIP and a one-time investment? Read lumpsum vs SIP. Planning to draw money out later? See how an SWP works.
Limits
The calculator uses one steady return for the whole period. It does not include exit loads, expense ratios, stamp duty or tax, and it does not pick funds. Past returns do not guarantee future returns.
Sources
- SIP calculator: formula used on this page (start-of-month instalments, monthly compounding)
- Lumpsum calculator, for one-time investments
If this page and the official notice disagree, follow the notice.
FAQ
How are SIP returns calculated?
What will ₹5,000 a month become in 15 years?
What is a step-up SIP?
Should I use CAGR or XIRR for a SIP?
Is the SIP result guaranteed?
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