What a SIP projection actually is
A systematic investment plan is not a product. It is an instruction to your fund house to buy units of a chosen scheme with a fixed amount on a fixed date every month, funded by an auto-debit from your bank account. There is no separate SIP fund, no separate SIP return, and no guarantee attached to the arrangement. What you own at the end is a pile of units bought at whatever the net asset value happened to be on each debit date.
What this calculator produces is therefore a projection, not a forecast. It takes the one number you cannot know — the fund's future annual return — as an input from you, and does the arithmetic that follows exactly. Every published SIP calculator, including the ones on fund-house websites, works this way. The honest reading of the output is: if the fund compounds at the rate I assumed, and I never miss an instalment, this is the corpus.
The headline is the maturity value. Underneath it, total invested is your own money — instalment times number of months — and estimated gains is the difference. Watching those two figures separate as you lengthen the tenure is the most useful thing on the page. Your own contributions dominate for years before growth overtakes them, and exactly when that happens depends entirely on the return you assumed: at the 12% default the two are equal in year eleven, at 10% in year thirteen, at 8% not until year sixteen.
The value in today's money output exists because a corpus is a number of future rupees, and future rupees buy less. It divides the maturity value by compounded inflation so you can judge the target against prices you actually recognise.
The annuity-due formula, term by term
Each instalment is a separate lump sum that compounds for a different length of time. The first one, paid at the start of month 1, has the whole tenure to grow; the last one, paid at the start of the final month, has one month. Adding up all of those individual future values gives a geometric series, and the closed form of that series is the annuity factor:
A = ((1 + i)^n − 1) / i × (1 + i)
Take the parts in turn. i is the monthly return, the annual rate divided by twelve — 12% a year becomes 1% a month under the nominal-rate convention every SIP calculator uses. n is the number of instalments, twelve per year. (1 + i)n is what one rupee invested at the very start would become. Subtracting 1 and dividing by i converts that single growth factor into the sum of the whole series — the future value of one rupee per month.
The trailing (1 + i) is the piece most people miss, and it is what makes this an annuity due rather than an ordinary annuity. A SIP debit is dated at the beginning of its month, so each instalment gets one more month of compounding than the textbook end-of-period assumption allows. Multiplying by (1 + i) supplies that extra month to every instalment at once. At 12% a year that factor is 1.01, so it raises the whole corpus by exactly 1% — on a ten-year ₹5,000 plan, ₹11,502.
Multiply the factor by your instalment and you have the maturity value. If you also invested a one-time amount on day one, that amount compounds on its own for the full n months and is simply added. The zero-return case is handled separately: the formula divides by i, but its limit as i approaches zero is just n, so a 0% assumption returns exactly what you paid in.
Worked example: ₹5,000 a month for 10 years at 12%
You start a ₹5,000 monthly SIP into an equity fund and assume 12% a year for ten years, with each debit on the first of the month.
- Monthly rate. i = 12% ÷ 12 = 1% = 0.01.
- Number of instalments. n = 10 × 12 = 120.
- Growth factor. (1.01)120 = 3.3003869. One rupee invested at the start becomes ₹3.30.
- Ordinary annuity factor. (3.3003869 − 1) ÷ 0.01 = 2.3003869 ÷ 0.01 = 230.0387.
- Adjust for start-of-month debits. 230.0387 × 1.01 = 232.3391.
- Maturity value. ₹5,000 × 232.3391 = ₹11,61,695, about ₹11.62 lakh.
- Total invested. ₹5,000 × 120 = ₹6,00,000.
- Estimated gains. ₹11,61,695 − ₹6,00,000 = ₹5,61,695.
- Absolute return. 5,61,695 ÷ 6,00,000 = 93.6% on the money paid in.
- In today's money at 6% inflation. ₹11,61,695 ÷ (1.06)10 = ₹11,61,695 ÷ 1.7908 = ₹6,48,685.
That last line is the one worth sitting with. The nominal corpus is nearly double what you paid in, but measured in what it will buy, the gain shrinks from ₹5.6 lakh to about ₹49,000 over your ₹6 lakh of contributions. Nothing is wrong with the arithmetic; inflation is simply a real cost that a nominal projection hides.
Cross-check the annuity-due adjustment by running the same plan with end-of-month debits: 230.0387 × ₹5,000 = ₹11,50,193. The difference is ₹11,502, which is exactly 1% of ₹11,50,193 — multiplying by 1.01 is the only thing separating the two figures.
How to read the corpus, and what it does not tell you
Judge the absolute-return figure carefully, because it flatters. A 93.6% absolute return over ten years is not a 93.6% return on your capital — most of your money was invested for far less than ten years. The correct annualised measure for a stream of dated cash flows is a money-weighted return (XIRR), which for a level SIP compounding at 1% a month comes back at 12.68% a year (1.0112 − 1), not at anything derived from the absolute figure. Use the money-weighted return calculator when you need to compare a real SIP against a benchmark, and the CAGR calculator only for single lump sums.
Judge the return assumption by what it is net of. The expense ratio is deducted from the fund's NAV daily, so the return you observe is already after it — but the return you assume here should be too. If you are working from a category's gross performance, subtract the ratio before entering it; the expense ratio drag calculator shows how much a percentage point costs over a long tenure.
Judge the tenure by the year-wise table rather than the headline. The table shows the corpus and the gain at each anniversary, and the shape it traces is the real argument for long tenures: the gain column is small and slow for the first four or five years, then accelerates as the base it compounds on grows. Anyone who stops a SIP after three years because "it has not done much" is stopping in the flat part of a curve that has not started yet.
Finally, remember what the projection assumes away: a single constant return with no volatility, no missed instalments, no exit load, and no tax on redemption. Real capital-gains treatment depends on the fund category and your holding period, and it applies to the gain, not the corpus.
What a ₹5,000 monthly SIP becomes at 12%
| Tenure | Total invested | Maturity corpus | Corpus ÷ invested |
|---|---|---|---|
| 5 years | ₹300,000 | ₹412,432 | 1.37× |
| 10 years | ₹600,000 | ₹1,161,695 | 1.94× |
| 15 years | ₹900,000 | ₹2,522,880 | 2.80× |
| 20 years | ₹1,200,000 | ₹4,995,740 | 4.16× |
| 25 years | ₹1,500,000 | ₹9,488,175 | 6.33× |
| 30 years | ₹1,800,000 | ₹17,649,569 | 9.81× |
Doubling the tenure from 10 to 20 years doubles what you pay in but multiplies the corpus by more than four. That gap is the whole case for starting a SIP early rather than starting a larger one later.
The assumed return is doing most of the work
Change the instalment and the corpus moves proportionally — double the SIP, double the corpus. The return assumption is not that polite. Take the ₹5,000 twenty-year plan from the table above: at 12% it finishes at ₹49.96 lakh, at 10% at ₹38.28 lakh (23% less), and at 9% at ₹33.64 lakh — a third gone for a three-point change in a number nobody can verify in advance. No calculator anywhere can tell you what a fund will return; it can only compound the figure you type. Run your plan two or three points below your central assumption and check that you can still live with the answer.
Where a SIP projection and a real statement diverge
- The debit date is not the allotment date. Units are allotted at the NAV of the day the money is realised, which can be a day or two after the debit. Over a decade this is negligible, but it is why your statement never matches to the rupee.
- Returns arrive in lumps, not in equal monthly slices. The formula applies the same 1% every month. Real funds do not, and with contributions flowing in, the order of good and bad years changes the outcome even when the average is identical.
- Exit load and tax come off the top. Many equity schemes charge an exit load on units redeemed within a year of purchase, and capital-gains tax applies to the gain on redemption. The maturity value here is gross of both.
- Missed instalments compound as missed growth. A skipped debit in year two costs far more than a skipped debit in year nine, because it forfeits the growth on the money as well as the money.
- Dividend-option units do not compound the same way. This projection assumes everything stays invested, which corresponds to a growth-option holding. A payout option distributes part of the return.
- A step-up SIP is a different formula. If you plan to raise the instalment each year, this level-payment model understates the corpus; use the step-up version instead.
How this relates to the other ways of asking the question
This calculator runs the plan forwards: you fix the instalment and it reports the corpus. The complementary tool runs it backwards — you fix the corpus and it reports the instalment — and that is the monthly investment needed calculator. Use this one when you know what you can spare and want to know where it lands; use the other when the target is fixed and the budget is the unknown. Both solve the same annuity equation for a different variable.
If your income rises each year and you intend the instalment to rise with it, the level-payment assumption here is too conservative. The step-up SIP calculator models an annual percentage increase, which typically reaches a given target with a materially smaller starting instalment. If you want a single lump sum projected with no ongoing contributions, use the compound interest calculator.
There is also a question this calculator deliberately does not answer: what your average purchase price was. Because a fixed rupee amount buys more units when the NAV is low, your average cost per unit is the harmonic mean of the NAVs rather than their simple average — the mechanism explained in full by the dollar-cost averaging calculator. That is the genuine mathematical benefit of investing on a schedule, and it is separate from, and much smaller than, the benefit of simply being invested for a long time.
Regulatory context matters too. In India, mutual fund schemes are regulated by the Securities and Exchange Board of India, and the industry body AMFI publishes the standardised NAV and performance data that any honest return assumption should start from. Fund-house SIP calculators use the same annuity-due formula used here; where two calculators disagree, it is almost always because one of them is treating the instalment as an end-of-month payment.
Key terms
- NAV
- Net asset value — the per-unit price of a mutual fund scheme, calculated at the end of each business day from the market value of its holdings less liabilities. Your SIP buys units at the NAV applicable on the allotment date.
- Annuity due
- A series of equal payments made at the beginning of each period. Because every payment gets one extra period of compounding, its future value is (1 + i) times that of an otherwise identical ordinary annuity.
- Absolute return
- Total gain divided by total amount invested, with no reference to time. It is not comparable with an annualised figure and rises mechanically with tenure.
- Exit load
- A charge deducted from the redemption proceeds when units are sold within a specified period of purchase. In a SIP each instalment has its own purchase date, so the load can apply to the most recent units even after years of investing.
- Step-up SIP
- A plan in which the instalment increases by a fixed percentage or amount each year, usually to track income growth. It reaches a given corpus with a smaller starting instalment than a level SIP.