SIP Calculator — Systematic Investment Plan
A Systematic Investment Plan (SIP) lets you invest a fixed amount every month into a mutual fund or index fund. Calculate your future corpus, see how wealth accumulates year by year, and find out how much you need to invest monthly to reach your goal.
SIP Formula & Math Explained
SIP Future Value Formula (Beginning of Period)
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
P = monthly SIP amount r = monthly return (annual rate ÷ 12) n = total months (years × 12)
Worked Example — $500/month at 12% for 15 Years
- Monthly rate r = 12% ÷ 12 = 1.0%
- n = 15 × 12 = 180 months
- FV = 500 × [(1.01^180 − 1) / 0.01] × 1.01
- 1.01^180 = 5.9958
- FV = 500 × [4.9958 / 0.01] × 1.01 = 500 × 499.58 × 1.01 = $252,289
- Total invested = $500 × 180 = $90,000
- Wealth gained = $252,289 − $90,000 = $162,289
SIP vs Lump Sum — Which is Better?
| Strategy | Amount Invested | At 12%/10 Years | Benefit |
|---|---|---|---|
| SIP $500/month | $60,000 | $116,170 | Rupee cost averaging, disciplined saving |
| Lump Sum $60,000 | $60,000 | $185,893 | Higher return if market rises; higher risk |
| SIP + Step-Up 10%/yr | ~$95,625 | $177,990 | Increases investment as income grows |
Lump sum beats SIP in a rising market; SIP wins through cost averaging in volatile/falling markets.
Popular Investment Vehicles & Historical Returns (USA, 2025)
| Asset Class / Fund | 10-Year Return | 30-Year Return | Risk Level |
|---|---|---|---|
| S&P 500 Index (VFIAX) | ~13.0% | ~10.7% | Moderate-High |
| Total Stock Market (VTI) | ~12.8% | ~10.5% | Moderate-High |
| International (VXUS) | ~5.8% | ~7.2% | Moderate-High |
| US Bond Index (BND) | ~1.5% | ~4.8% | Low-Moderate |
| Real Estate (VNQ REIT) | ~8.4% | ~9.6% | Moderate-High |
| Target-Date 2050 (VFIFX) | ~10.2% | ~9.8% | Moderate |
| High-Yield Savings | ~2.5% | ~3.0% | Very Low |
Data as of January 2025 — past performance does not guarantee future results.
Power of Starting Early — $300/month at 10%
| Start Age | Retire at 65 | Total Invested | Corpus | Wealth Multiple |
|---|---|---|---|---|
| 25 | 40 years | $144,000 | $1,897,224 | 13.2× |
| 30 | 35 years | $126,000 | $1,134,913 | 9.0× |
| 35 | 30 years | $108,000 | $678,146 | 6.3× |
| 40 | 25 years | $90,000 | $398,197 | 4.4× |
| 45 | 20 years | $72,000 | $229,051 | 3.2× |
References
- Securities and Exchange Commission (SEC) — Investor.gov compound interest calculator methodology.
- Vanguard — How America Saves, annual report on retirement savings.
- Morningstar — Historical mutual fund return data and analysis.
- FINRA — Investor education on dollar-cost averaging and SIP equivalents.
