What is a SIP?
A Systematic Investment Plan, or SIP, is a method of investing a fixed amount in a mutual fund at regular intervals — typically every month. Instead of trying to time the market with a large lump-sum, SIPs spread your investment across months and years, buying more units when prices are low and fewer when prices are high. This averaging effect, combined with the power of compounding, makes SIPs one of the most popular and effective ways to build long-term wealth.
SIPs are particularly suited to salaried investors because they align with monthly income. Even modest amounts — $100 or $500 per month — can grow into substantial portfolios over 10, 20, or 30 years, thanks to compounding returns.
How to Use This SIP Calculator
- Enter your planned monthly investment amount.
- Set an expected annual return based on the type of fund (equity, debt, hybrid).
- Choose your investment duration in years.
- Instantly see your invested amount, estimated returns, and projected portfolio value, along with a year-by-year growth chart.
SIP Formula
- FV = Future value of investment
- P = Monthly contribution
- r = Monthly rate of return
- n = Total number of months
Example
Invest $500 every month for 10 years at an expected return of 12% per annum. You will have invested $60,000 of your own money, but your portfolio could grow to roughly $116,000 — generating around $56,000 in returns purely through compounding.
Why SIPs Work
- Discipline: Automated monthly debits build a consistent saving habit.
- Cost averaging: Buying through ups and downs evens out your purchase price.
- Compounding: Reinvested returns earn their own returns, accelerating growth over time.
- Flexibility: Start with as little as $100, pause anytime, top-up annually.