What a SIP is and how this tool models it
A systematic investment plan, or SIP, is a way of buying a mutual fund, not a separate product. A fixed sum leaves your bank account on a set date each month and buys units at that day's NAV. Instalments can start at ₹500 a month.
A fixed amount buys more units when prices are low and fewer when they are high. This rupee cost averaging does not guarantee a profit or prevent a loss. The calculator assumes one steady return, so treat its figures as a planning range.
The formula behind a SIP's future value
Future value = P × [((1 + i)^n − 1) ÷ i] × (1 + i). P is the monthly instalment, n the number of months and i the monthly rate: the annual return divided by 12, then by 100. At 12% a year, i is 0.01.
The final (1 + i) appears because each instalment goes in at the start of its month and earns that month's return. At 0% the formula reduces to P × n, the money you put in. Goal mode solves the same formula for P.
Worked example: ₹10,000 a month for 10 years
At 12% for 10 years, n is 120 and (1.01)^120 is about 3.3004. The factor comes to roughly 232.34, so the future value is ₹23,23,390.76, about ₹23.2 lakh, from ₹12,00,000 invested. Estimated returns are ₹11,23,390.76.
Time does much of the work. The same SIP run for 20 years reaches ₹99,91,479.19, just short of ₹1 crore, from ₹24 lakh invested. In goal mode, ₹25 lakh in 10 years at 12% needs ₹10,760.14 a month.
Step-up SIP compared with a flat SIP
A step-up, or top-up, SIP raises the instalment by a set percentage every 12 months, often in line with a rising salary.
With a 10% step-up, ₹10,000 becomes ₹11,000 in year two and ₹23,579.48 in year ten. Over 10 years at 12% you invest ₹19,12,490.95 and end with ₹33,74,326.26. That is ₹10,50,935.50 more than the flat SIP, but ₹7,12,490.95 of it is extra money you paid in.
Inflation and tax on equity fund gains
At 6% inflation, the ₹23.2 lakh from the example buys what ₹12,97,369.27 buys today. Choose an inflation rate that fits your goal.
Figures are before tax, which falls due when you redeem. As of November 2026, resident investors in equity-oriented funds pay:
- 12.5% on long-term gains above ₹1.25 lakh a year, for units held more than 12 months.
- 20% on short-term gains, for units held 12 months or less.
- Surcharge where it applies, plus 4% health and education cess.
- Debt funds and other non-equity funds follow different rules.