SIP calculator

Each instalment is paid at the start of its month and earns that month's return. The monthly rate is a twelfth of the yearly rate, compounded monthly. Future value = instalment × ((1 + i)ⁿ − 1) ÷ i × (1 + i), where i is the monthly rate and n is the number of months. Fund houses' own SIP calculators use the same method.

₹10,000 a month for 10 years at 12% a year: i is 1% and n is 120. The value at the end is ₹23,23,391. The total invested is ₹12,00,000, so the gains are ₹11,23,391. Raising the instalment by ₹5,000 to ₹15,000 gives ₹34,85,086, because the result scales in direct proportion to the instalment.

The monthly investment runs from ₹500 to ₹5,00,000, the expected return from 1% to 30% a year, and the period from 1 to 40 years. A year-by-year chart shows how the invested amount and the gains build up. What-if rows show the same plan with ₹5,000 more a month, 5 more years, or a return 2% lower.

Mutual fund returns vary from month to month, so the figure is what a constant rate would give, not what any fund will earn. A single rate also differs from XIRR, the one yearly rate that matches a real series of dated instalments, which is how a fund's actual SIP return is reported.

The calculation takes no account of tax, expense ratio, exit load or inflation. Each instalment's units have their own holding period, and units are sold oldest first. In an equity-oriented fund, units held 12 months or less are taxed at 20% on their gain and longer-held units at 12.5% on gains above ₹1.25 lakh a year, so the instalments of the last 12 months are always short-term. It also covers a flat instalment only, with no yearly step-up and no lump sum.