SIP Calculator

Investing in India is no longer just about fixed deposits or saving for a rainy day. In today’s world, many people want their money to work smarter, not just harder.

That’s where Systematic Investment Plans, or SIPs, have changed the way millions invest. Whether someone is starting their first job, managing a family budget, planning a Bali trip, or planning for retirement, SIPs offer a simple yet powerful path to long-term wealth creation.

But what exactly is an SIP? How does it work? And how can you calculate what you’ll get from it?

This guide will walk you through the core concepts, help you understand how SIPs adapt to different life stages, and show you how to estimate your future wealth using an SIP calculator – step by step.

What is SIP (Systematic Investment Plan)?

A SIP is a method of investing a fixed amount of money at regular intervals (usually monthly) into a mutual fund scheme of your choice.

Instead of waiting to save a large amount, SIP lets you start small and stay consistent. For example, someone might invest ₹1,000 or ₹5,000 every month. The amount is auto-debited from the bank and used to buy fund units.

Over time, SIP benefits from:

Compounding

Compounding is where the earnings from your investment help generate more earnings in the future.

●   Let’s see how compounding works with SIP:

●   1st Month: You invest ₹10,000.

●   2nd Month: You invest ₹10,000 again — the first ₹10,000 grows to ₹10,120.

●   3rd Month: You invest another ₹10,000 — your old money continues to grow.

This keeps happening each month.

So your earlier investments grow, and you keep adding new money — resulting in rapid growth over time.

●   Rupee Cost Averaging

An investment strategy where you invest a fixed amount of money at regular intervals, regardless of the market price due to which you can buy more units when prices are low and fewer units when prices are high, averaging out your cost over time.

Let’s see how Rupee Cost Averaging works:

Total Investment = ₹50,000
Total Units = 1,550
Average Cost per Unit = ₹32.26
Even with fluctuating prices, the average cost remains lower.

Formula to Calculate SIP

FV = P × ([(1 + r)ⁿ – 1] / r) × (1 + r)

FV = Maturity amount

P = Monthly investment

n = Number of payments

r = Rate of interest per period

SIP Examples — How Wealth Grows

Here are a few examples to help you visualize how SIPs grow:

Example 1: ₹5,000/month for 10 years @ 12%

You invest ₹12 lakh → SIP grows it to ₹25.9 lakh! Long-term compounding creates exponential growth.

Types of SIP – Which One Matches Your Style?

SIPs are not limited to just one format. Depending on your income pattern, goals, or flexibility needs, there are several variations you can choose. Below is the list of types of SIP -

1. Regular SIP

This is the most straightforward type. You choose a fixed monthly amount - say ₹3,000 - and invest it every month for a selected number of years.

For example, Rohan, a 28-year-old software engineer, sets up a Regular SIP of ₹3,000/month in a diversified equity fund. He continues this without changing the amount for the next 10 years.

It's perfect for those who prefer steady and predictable investing.

2. Top-Up SIP

As your income grows, so can your SIP. This type lets you increase your investment amount at regular intervals - usually yearly.

For example, Priya starts with ₹5,000/month and chooses to increase it by ₹500 every year. By her fifth year, she’s investing ₹7,000/month.

This approach helps investors gradually increase their commitment without feeling the pinch.

3. Flexible SIP

If you’re a freelancer or running a small business and your income varies, a flexible SIP would be a great choice for you as it will let you adjust your investment amount or skip months when needed.

For example, Sameer, a wedding photographer, might invest ₹7,000 in a busy month and ₹2,000 in a slower one, skipping months where income is uncertain.

This option provides breathing room without forcing a fixed schedule.

4. Trigger SIP

This is designed for investors who want to invest based on specific events or conditions like a market dip or a certain NAV level.

For example, Neha sets up a SIP that only triggers when the Nifty index drops below 18,000. She wants to take advantage of lower valuations during market corrections.

While powerful, this method suits experienced investors who understand market trends and timing.

5. Perpetual SIP

Most SIPs are created for a fixed period like 3 or 5 years. A perpetual SIP, however, doesn’t have an end date. It continues until you decide to stop it.

Example: Ajay wants to invest for retirement, which is 25 years away. Instead of selecting a 5-year term, he starts a perpetual SIP and reviews it every few years.

This is ideal for long-term financial goals without a specific deadline.

6. Multi SIP

Instead of setting up separate SIPs for each mutual fund, a Multi SIP allows you to invest in multiple funds in one go.

For instance, Ritu wants to invest ₹10,000/month split across 3 funds. She sets up a Multi SIP to divide ₹4,000 into a large-cap fund, ₹3,000 into a mid-cap fund, and ₹3,000 into a hybrid fund.

It helps manage diversification with less effort.

7. SIP with Insurance

Some mutual fund houses offer a free life insurance cover along with SIPs if you commit for a minimum term typically 3 years.

Example: Karan starts a ₹4,000/month SIP in a fund that includes life insurance cover of up to ₹10 lakh. It’s an added benefit while staying invested.

While not a substitute for full-term life insurance, it’s a thoughtful bonus for long-term investors.

Benefits of SIP – Why It Works for Most Investors

1. Encourages Regular Investing

By investing a fixed amount on a regular basis, you start relating investing to a routine behavior similar to the payment of bills or saving rent. With time, this habit forms a solid financial base.

2. Reduces Market Timing Stress

Since SIP spreads investments across different time periods, it automatically purchases more units when prices are less and less when they're high. By doing so, it reduces the effects of volatility, particularly in volatile markets.

3. Compounding Growth

The sooner, the better. SIPs help your money grow, not only from returns but also from the returns on those returns. This compounding effect, over time, becomes a huge wealth creator.

4. Adapts to Life

As you move ahead in life, switch jobs, increase your income, or experience financial fluctuations your SIP can be easily modified accordingly. Whether it's increasing contributions or changing fund options, SIP provides space to grow.

5. Aligns with Goals

You can start SIPs with specific goals in mind such as a child’s education, down payment for a house, or retirement planning. With a clear time frame and expected return, SIPs help convert vague dreams into achievable milestones.

What is an SIP Calculator and How Does It Help?

An SIP calculator is a simple tool that tells you what your investments might look like in the future. All you need to enter is:

• Monthly investment amount (like ₹5,000)
• Investment period (like 10 years)
• Expected annual return (like 12%)

In seconds, it shows you:

• How much will you invest in total ?
• How much your money can grow ?
• The maturity value you can expect at the end ?

How to use Finanjo’s SIP Calculator – Step-by-Step

• Enter your monthly SIP amount (e.g., ₹3,000)
• Choose your investment period (e.g., 10 years)
• Select an expected return (e.g., 10%)
• It will calculate and dynamically update the graph and the values.

Tips to Make the Most of SIP

• Start early – even if the amount is small
• Review once a year – make sure your fund is performing well
• Gradually increase your SIP – especially after salary hikes
• Avoid stopping in bad markets – downturns often lead to better returns later

SIPs work best when they’re treated as a long-term journey, not a short-term bet.