See how much a monthly SIP (systematic investment plan) in mutual funds could grow to over time, and how much more you’d have by increasing it each year.
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How SIP returns are estimated
Each month’s instalment grows at your expected annual return, compounded monthly. Money invested early has the longest to compound, which is why starting sooner matters more than investing larger amounts later.
Worked examples
All assume a steady 12% a year. Real returns go up and down.
| SIP | Years | Invested | Estimated value |
|---|---|---|---|
| ₹5,000 | 10 | ₹6,00,000 | ₹11,20,179 |
| ₹5,000 | 20 | ₹12,00,000 | ₹45,99,287 |
| ₹10,000 | 15 | ₹18,00,000 | ₹47,59,314 |
Doubling the time from 10 to 20 years doubles what you put in but roughly quadruples the final value.
The effect of a step-up
Raising a SIP by 10% each year, in line with pay rises, can add a large amount over 15 to 20 years compared with keeping it flat. Try it in the calculator.
Things to remember
- Equity mutual funds can fall, sometimes sharply. SIPs suit goals five or more years away.
- Gains above the annual exemption are taxed when you redeem.
- Check the fund’s expense ratio: lower costs leave more of the return for you.
Frequently asked questions
What return should I assume for a SIP?
Many people use 10% to 12% for long-term equity funds, but past returns don’t guarantee future ones. Try a lower figure to be cautious.
Is a SIP better than a lump sum?
A SIP spreads your buying over time and builds a habit. A lump sum can do better in a rising market but carries more timing risk.
What is a step-up SIP?
A SIP that increases by a set percentage each year, for example 10%, so your investing keeps pace with your income.
Can I stop a SIP anytime?
Usually yes, without penalty, though some tax-saving (ELSS) funds have a 3-year lock-in.
Sources
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