How it works
A SIP invests a fixed amount on the same date each month, buying more units when the market is down and fewer when it is up. Over a long enough period that averaging removes most of the risk of investing a lump sum at the wrong moment, and it converts investing from a decision you have to keep making into a standing instruction.
The striking part is how late the growth arrives. Over fifteen years at 12%, a ₹10,000 monthly SIP contributes ₹18 lakh and ends just under ₹48 lakh — but almost two-thirds of those gains appear in the final five years. That is why stopping a SIP early costs far more than the contributions you skip, and why starting at 25 rather than 35 roughly triples the outcome for the same monthly amount.
FV = P x (((1+i)^n − 1) ÷ i) x (1+i)
- P is the monthly investment amount
- i is the monthly return: (1 + annual rate)^(1/12) − 1. At 12% a year that is 0.948879% a month, not 1% — twelve of those months have to compound back to exactly 12%
- n is the total number of instalments (years x 12)
- The trailing (1+i) reflects investing at the start of each month, the convention every Indian SIP calculator uses
- Pick an amount you can sustainA ₹5,000 SIP you never pause beats a ₹15,000 one you stop after eighteen months. Consistency dominates size.
- Use a realistic returnIndian equity funds have historically returned around 11–13% over long periods. Anything above 15% in a projection is optimism, not a plan.
- Give it at least seven yearsBelow five years, market timing still dominates. Beyond ten, compounding does.
- Add a step-upRaising the SIP 10% a year in line with salary increments has a dramatic effect — often 40–50% more corpus over fifteen years.
- Automate and leave it aloneSet the debit for the day after your salary credit, then stop checking. Reacting to market news is what destroys SIP returns.
A worked example
Investing ₹10,000 a month for fifteen years at 12% produces about ₹47,59,000. You contribute ₹18,00,000 of that; the remaining ₹29,59,000 is growth — a little over 1.6 times what you put in.
Add a 10% annual step-up, so the SIP rises to ₹11,000 in year two, ₹12,100 in year three and so on, and the same fifteen years end near ₹82,75,000 on contributions of ₹38,12,000. The step-up costs a little more each year and is usually funded entirely by an annual increment.
Common mistakes
- Stopping the SIP when markets fall — precisely when the units are cheapest
- Assuming 15% or more, then treating the shortfall as a failure of the plan
- Starting late and hoping a larger amount compensates; ten extra years beats a larger cheque
- Running six overlapping SIPs in funds that hold the same stocks and calling it diversification
- Judging a SIP on one or two years of returns, which reveal nothing about a fifteen-year plan
Starting age changes everything (₹10,000/month at 12% until 60)
| Start age | Years invested | Total invested | Approximate corpus |
|---|---|---|---|
| 25 | 35 years | ₹42,00,000 | ₹5.5 crore |
| 30 | 30 years | ₹36,00,000 | ₹3.1 crore |
| 35 | 25 years | ₹30,00,000 | ₹1.7 crore |
| 40 | 20 years | ₹24,00,000 | ₹92 lakh |
| 45 | 15 years | ₹18,00,000 | ₹47.6 lakh |
Frequently asked questions
Each instalment compounds from the date it is invested until maturity, so the formula is a future value of an annuity: FV = P × (((1+i)^n − 1) ÷ i) × (1+i), where n is the number of instalments and i is the monthly rate, calculated as (1 + annual return)^(1/12) − 1. Contributions are assumed at the start of each month.
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How BudgetAnalyzer helps
A projection only matters if you can fund it every month. BudgetAnalyzer shows how much room your budget actually has, and its Investments section tracks what your SIPs are worth today against what you have put in — so the plan on this page and the reality in your portfolio stay in one place.