What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan (SIP) is a method offered by mutual funds to invest a fixed amount of money at regular intervals (monthly) into a chosen mutual fund scheme, taking advantage of rupee cost averaging and power of compounding.

How is the SIP future value calculated?

The mathematical formula for SIP future value is: FV = P × [((1 + i)^n - 1) / i] × (1 + i), where P is monthly investment, i is monthly interest rate (annual rate / 12 / 100), and n is total months.

What is the difference between SIP and Lump Sum investment?

In a Monthly SIP, you deposit money gradually every month, reducing market timing risk. In a Lump Sum investment, you deposit the entire capital at once on Day 1.

What expected rate of return should I assume for Mutual Funds in India?

Historically, Indian equity mutual funds (large-cap, mid-cap, index funds) have generated compound annual returns ranging between 12% and 15% over long-term periods (7 to 15+ years).

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SIP & Mutual Fund Wealth Calculator 📈

Calculate future returns on your Monthly SIP or Lump Sum mutual fund investments with real-time compound growth, inflation adjustment & year-by-year schedule.

Monthly Investment Amount (₹)

Expected Return Rate (% p.a.)

Investment Horizon (Years)

Adjust for Future Inflation (Real Purchasing Power)

Expected Future Value

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Total Invested

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Est. Wealth Earned

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50% Invested

50% Wealth Earned

How does a Systematic Investment Plan (SIP) work?

A **Systematic Investment Plan (SIP)** allows investors to invest a fixed amount of money at regular intervals into equity or debt mutual funds. Instead of trying to time the market with a large one-time investment, SIP disciplined investing leverages **Rupee Cost Averaging** (buying more units when prices are low and fewer units when prices are high) and the exponential **Power of Compounding**.

Mathematical Formula for SIP Return

The future value of a monthly SIP investment is calculated using the standard compound formula:

          FV = P × [ ((1 + i)^n - 1) / i ] × (1 + i)
        

FV = Future Value of investment
P = Monthly investment amount
i = Monthly interest rate (Annual Return Rate ÷ 12 ÷ 100)
n = Total number of monthly installments (Years × 12)

Frequently Asked Questions (FAQ)

What is the expected long-term SIP return in Indian Mutual Funds?

Historically, Indian equity mutual funds (such as Nifty 50 Index Funds, Flexi Cap Funds, and Mid Cap Funds) have delivered average annualized compound returns of 12% to 15% over 10+ year horizons.

Is SIP better than Lump Sum investment?

SIP is generally safer for retail investors because it removes market timing anxiety and promotes consistent monthly saving. Lump Sum investments yield higher returns if invested right after a market crash.

How does inflation impact my mutual fund returns?

Inflation reduces the purchasing power of money over time. For example, ₹1 Crore in 20 years with 6% annual inflation will have the equivalent purchasing power of around ₹31 Lakhs today. Enable our inflation toggle above to see real inflation-adjusted wealth!