Loans, investing & tax
How SIP Returns Are Calculated (with Examples)
Updated 25 September 2026 · 5 min read
A SIP (systematic investment plan) invests a fixed amount in a mutual fund every month. Each instalment grows for a different length of time — the first one for the whole period, the last one for just a month — so the maths is a little different from a lump sum.
The SIP formula
FV = P × [((1 + i)ⁿ − 1) ÷ i] × (1 + i)
- P — monthly instalment
- i — expected monthly return: annual return ÷ 12 ÷ 100 (12% a year → 0.01)
- n — number of instalments (years × 12)
Example: ₹10,000 a month for 10 years at 12%. You invest ₹12,00,000; at maturity it's worth about ₹23,23,391 — gains of ₹11.23 lakh.
Calculate your SIP in the SIP calculatorEstimate the future value of monthly mutual fund SIPs, with optional annual step-up.Time matters more than amount
₹5,000 a month at an assumed 12% a year:
| Years | You invest | Estimated value |
|---|---|---|
| 5 | ₹3,00,000 | ₹4,12,432 |
| 10 | ₹6,00,000 | ₹11,61,695 |
| 15 | ₹9,00,000 | ₹25,22,880 |
| 20 | ₹12,00,000 | ₹49,95,740 |
| 25 | ₹15,00,000 | ₹94,88,175 |
Doubling the time from 10 to 20 years doubles what you put in — but the value grows more than four times.
How much does the return rate change things?
₹10,000 a month for 15 years grows to about ₹41.79 lakh at 10%, ₹50.46 lakh at 12% and ₹61.29 lakh at 14%. Small differences in return compound into big differences in the end — which is why fund costs (expense ratios) matter.
Step-up SIP: raise it every year
Increase the ₹10,000 SIP by 10% each year for 10 years and you invest ₹19.12 lakh — which grows to about ₹33.74 lakh at 12%, against ₹23.23 lakh for a flat SIP. Turn on step-up in the calculator to see your own numbers.
Keep in mind
- These are projections at a constant assumed return. Real market returns vary — some years negative.
- Fund statements show your actual return as XIRR, which accounts for the timing of each instalment.
- Equity gains are taxed when you redeem; check the current capital gains rules before you withdraw.
Frequently asked questions
What is the formula for SIP returns?
Future value = P × [((1 + i)^n − 1) ÷ i] × (1 + i), where P is the monthly instalment, i is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of months. The final (1 + i) is because each instalment is invested at the start of the month.
Are SIP returns guaranteed?
No. Mutual fund returns depend on the market. A calculator shows what an assumed average return would give; real returns go up and down year to year.
What is a step-up SIP?
A SIP whose monthly amount rises by a fixed percentage every year, usually in line with your salary. It builds a much bigger corpus than a flat SIP.