SIP calculator

What is a SIP?

A systematic investment plan (SIP) means investing a fixed amount at regular intervals, usually every month, instead of all at once. It is a way of paying in, not a product: what your money is invested in decides how it behaves.

Each instalment buys units at that day's price. The same amount buys more units when the price is lower and fewer when it is higher, so the average price you pay sits between the extremes. This is often called rupee cost averaging. It does not remove the chance of a loss.

What does the SIP calculator do?

It works out what a series of monthly amounts could be worth after a number of years if the money grew at a yearly rate you choose. The rate is yours: the calculator does not forecast one, and it does not know what any investment will do.

Nobody knows the rate in advance, so you can set a range width to see a low and a high figure either side of your rate. The low end uses your growth rate, after any annual fee, minus the range width; the high end uses it plus the range width. The low end is not taken below 0%. With the range width at 0, where the page starts, it shows one figure at the rate you chose.

What do the inputs mean?

In SIP mode the calculator needs a monthly amount, a number of years and a yearly growth rate. The other inputs are optional: a starting amount, inflation, an annual fee, a yearly step-up and the width of the range.

Monthly amount

The amount you put in at the start of each month.

Starting amount

A one-off sum invested on day one, before the first monthly amount. Leave it at zero for a plain SIP.

Duration

How many whole years you keep investing. In lumpsum mode, how long the single amount is left to grow.

Assumed growth rate

The yearly rate you want to test. It is an assumption, not a prediction. Zero and negative rates are allowed, so you can see what a flat or falling period does.

Inflation

The yearly rise in prices. It is used only for the today's-money figures, not for the growth itself.

Annual fee

A yearly charge, as a percentage, taken off the growth rate. Use it for a fund's running cost or an adviser's fee if you want to see its effect.

Annual step-up

How much the monthly amount rises each year, as a percentage, from the second year on. The starting amount does not step up.

Range width

How many percentage points either side of your growth rate, after any annual fee, the low and high ends of the range sit. It starts at 0, which shows one figure; set a width to see a range. The low end is not taken below 0%.

How is a SIP calculated?

Each monthly amount goes in at the start of its month and grows at a monthly rate worked out from your yearly rate:

monthly rate i = (1 + yearly rate)^(1/12) − 1

The value after n months of a steady monthly amount P is then:

value = P × [ ((1 + i)^n − 1) ÷ i ] × (1 + i)

A starting amount A is compounded on its own and added: A × (1 + yearly rate)^years. With a step-up, the same sum is done year by year, with P rising by the step-up each year.

Worked example, in SIP mode on this page's starting numbers: ₹10,000 a month for 15 years (n = 180 months) at 10% a year. The monthly rate is 0.7974%. The value comes to ₹40,16,212, of which ₹18,00,000 is what you put in and ₹22,16,212 is growth at the rate you chose. Set a range width of 2 and, with no annual fee, the page shows the same sum at 8% and at 12% as well; that is the range.

SIP vs lumpsum: what is the difference?

A SIP invests a fixed amount at regular intervals; a lumpsum invests one amount at one time. The calculator has a tab for each, and a third that combines them.

SIP

The same amount every month.

Lumpsum

One amount, invested once and left to grow.

Both

A starting amount, followed by a monthly amount.

How do I read the result?

The headline is what the money could be worth at the growth rate you set, shown next to the total you put in. If you set a range width, it becomes a range between the low and high ends.

You put in

Everything you contribute, added up, before any growth.

The range

The value at the low and high ends, before tax, when you set a range width.

In today's money

The same figures reduced by the inflation you entered, so a sum received years from now can be compared with what you put in today. If the growth rate, after any annual fee, is below inflation, this figure falls below what you put in: the money would buy less than it does now.

What does the SIP calculator leave out?

It assumes the same rate every year. Real investments rise and fall, and the same average rate can give very different amounts depending on when the money goes in. It leaves out tax, exit charges and any product charge you have not entered as the annual fee, and it assumes every instalment is paid on time.

To see the yearly rate that a past investment grew at, use the CAGR calculator.