SIP Calculator

Calculate the wealth you can accumulate through Systematic Investment Plans (SIP) in mutual funds.

₹5,000
₹500₹1,00,000
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10Yr
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Understanding Systematic Investment Plans (SIP)

What is an SIP?

A Systematic Investment Plan (SIP) is a facility offered by mutual funds to investors, allowing them to invest a fixed amount of money at pre-defined regular intervals. It is one of the most disciplined ways to build long-term wealth, as it enforces saving habits and takes advantage of market volatility.

The Power of Rupee Cost Averaging

When you invest through an SIP, you buy more mutual fund units when the market is down (prices are low) and fewer units when the market is up (prices are high). Over time, this averages out the cost of your investments, protecting you from the risk of trying to time the market.

SIP vs Lumpsum Investment

Unlike a lumpsum investment where you invest a large amount of money all at once, an SIP spreads your risk over time. Lumpsum investments carry the risk of entering the market at a peak, whereas SIPs naturally average out your purchase price. For salaried individuals, an SIP perfectly aligns with their monthly cash flow.

Mutual Fund Taxation (LTCG & STCG)

When calculating SIP returns, it is important to factor in taxation. For equity mutual funds in India, if you hold the units for less than one year, the profits are taxed at 20% as Short-Term Capital Gains (STCG). If you hold them for more than one year, profits exceeding ₹1.25 Lakhs in a financial year are taxed at 12.5% as Long-Term Capital Gains (LTCG). Remember that each SIP installment is treated as a fresh investment, and its holding period is calculated individually.

Example Scenario

If you invest just ₹5,000 every month for 20 years at an expected return of 12% p.a., your total investment of ₹12,00,000 will grow into a massive ₹49,95,740. You earn nearly ₹38 Lakhs purely in returns, showcasing the magical effect of compounding over long periods.

Frequently Asked Questions

Can I stop my SIP at any time?▼
Yes, mutual fund SIPs are entirely flexible. You can pause, stop, or increase your SIP amount at any time without paying any penalty.
Is the expected return rate guaranteed?▼
No. The return rate in a mutual fund depends entirely on market performance. While historical data suggests equity markets return 10-12% over the long term, these returns are not guaranteed.
What is a Step-Up SIP?▼
A Step-up SIP allows you to automatically increase your monthly investment amount every year (e.g., by 10%). This is highly recommended as your salary and income typically increase each year.
Are there any hidden charges in an SIP?▼
Mutual funds charge an Expense Ratio, which is a small percentage (usually between 0.5% and 1.5%) deducted annually for managing your money. Always look for Direct Mutual Funds instead of Regular Mutual Funds, as Direct funds have a lower expense ratio and yield better returns over the long term.