SIP Calculator: How Much Can You Accumulate?

How SIP Works

In a SIP, you invest a fixed amount every month into a mutual fund — typically an equity fund. Each month's investment buys units at the prevailing Net Asset Value (NAV). Over time, as the NAV grows, the value of your accumulated units increases.

The key advantage of SIP over lump-sum investing is Rupee Cost Averaging. When markets fall, your fixed SIP amount buys more units. When markets rise, it buys fewer. Over time, this averages out your cost and reduces the impact of market volatility.

The Power of Compounding in SIPs

Compounding works by generating returns on your returns. In equity mutual funds, the assumed long-term annualised return is typically 12% CAGR for diversified large-cap funds. At this rate, money roughly doubles every 6 years.

The most important variable in SIP compounding is time, not the amount. Starting 5 years earlier can result in a corpus that's 60–70% larger at retirement, even if you invest the same total amount.

SIP Corpus Projections: Real Examples

Using a 12% annual return assumption (approximately the long-term average for diversified equity funds in India):

Step-Up SIP: Why It Matters

A step-up (or top-up) SIP increases your monthly investment by a fixed percentage each year — typically 10% to match salary increments. The impact is dramatic over long periods.

Example: Starting at ₹10,000/month with a 10% annual step-up, over 20 years at 12% returns, your corpus grows to approximately ₹1.77 crore — compared to ₹1 crore with a flat ₹10,000 SIP. The step-up adds nearly ₹77 lakh of additional wealth.

Step-up SIP works because your corpus growth in later years is exponentially larger — adding more capital in those compounding years amplifies the effect significantly.

Tax on SIP Returns

For equity mutual funds (held >12 months), long-term capital gains (LTCG) are taxed at 12.5% above ₹1.25 lakh per year (as of FY 2025-26). Each SIP instalment starts its own 12-month holding period from the date of investment, so when you redeem, older instalments are usually LTCG and newer ones may be STCG (taxed at 20%).

ELSS funds (tax-saving equity funds) have an additional benefit — your SIP investments qualify for Section 80C deductions under the old regime, giving you a dual benefit of tax savings today and wealth creation over time.

Tips for Effective SIP Investing

• Start early, even small. A ₹2,000 SIP started at 25 beats a ₹5,000 SIP started at 35.
• Don't stop during market crashes.SIPs buy more units when NAVs are low — that's when you benefit most from Rupee Cost Averaging.
• Add step-up every year. Even a 5% annual increase makes a meaningful difference over 15+ years.
• Stick to a goal.Define your corpus target, reverse calculate the required SIP, and don't pause unless absolutely necessary.
• Diversify across categories.Large-cap funds for stability, flexi-cap or mid-cap for growth. Don't put all SIPs into a single fund.