By the Tooliday Team. Last updated 14 November 2026.
A Systematic Investment Plan, or SIP, means investing a fixed amount at regular intervals, usually every month, instead of putting in one large sum. Many people use SIPs with mutual funds because the amount is small and the habit is automatic.
SIP calculators show how much your money could grow. Before you rely on one, it helps to know what it is actually calculating. This guide explains the formula, shows an example, and is honest about what the number can and cannot promise. Try the figures yourself with our SIP Calculator.
The idea in one paragraph
Every month you invest the same amount. Each instalment starts earning returns from the day it is invested, so your earliest instalments have the longest time to grow. The estimate adds up the growth of every single instalment.
The formula
If your instalments are made at the end of each month, the future value is:
FV = P × ((1 + i)^n − 1) ÷ i
- P is the monthly amount.
- i is the monthly rate of return. For an assumed 12% a year, i = 12 ÷ 12 ÷ 100 = 0.01.
- n is the number of monthly instalments.
If instalments are made at the start of each month, multiply the result by (1 + i), because each payment earns one extra month.
A worked example
Invest ₹5,000 a month for 10 years and assume 12% a year, for illustration.
- P = 5,000
- i = 0.01
- n = 120
The estimated value is about ₹11,50,193. You will have put in ₹6,00,000 yourself, so the estimated gain is about ₹5,50,193. If the instalments are made at the start of each month, the figure rises to about ₹11,61,695.
Notice that nearly half of the final value comes from growth, even though you never added more than ₹5,000 a month.
Why time matters more than the amount
Here is the same ₹5,000 a month at the same assumed 12% for different periods:
| Years | You invest | Estimated value |
|---|---|---|
| 5 | ₹3,00,000 | ₹4,08,348 |
| 10 | ₹6,00,000 | ₹11,50,193 |
| 15 | ₹9,00,000 | ₹24,97,901 |
| 20 | ₹12,00,000 | ₹49,46,277 |
Going from 10 to 20 years doubles the amount you invest but multiplies the estimated value more than four times. That is compounding at work, and it is the main reason people are advised to start early rather than wait for a bigger amount.
The limits of any SIP calculator
This is the most important part of the article.
- The return is an assumption. Equity and mutual fund returns are not fixed. Markets rise and fall, and a fund can return much less, or even lose money, over a given period. The 12% above is only an example.
- Past returns do not guarantee future returns. Be careful with any website or advertisement that treats an expected return as a promise.
- Costs and taxes are not included. Fund expense ratios, exit loads and taxes on gains reduce what you actually keep.
- Inflation changes what the money buys. ₹11.5 lakh in ten years will buy less than ₹11.5 lakh today.
A calculator is for planning and comparing scenarios, not for predicting results.
Practical points before starting a SIP
- Decide the goal and time frame first, for example a child’s education in 12 years or a retirement fund.
- Build an emergency fund before investing for the long term.
- Read the fund’s official documents and check that it matches your risk comfort. India’s mutual fund industry body publishes investor education material at AMFI.
- Choose an amount you can keep paying through bad months. Stopping a SIP in a panic usually defeats the purpose.
Try it yourself
Change the amount, the assumed return and the number of years in our SIP Calculator and watch how each one affects the result. Try a lower return, such as 8%, as well as a higher one, to see a more cautious picture.
This article is educational and is not investment advice. Tooliday is not a registered investment adviser. Investments are subject to market risk. Please consult a qualified financial professional before investing.