What will a monthly SIP actually grow to?

A systematic investment plan is a standing instruction to buy units of a mutual fund with a fixed amount on a fixed date every month. It is not a product and it is not an asset class. It is a way of buying one, and the fund underneath it can be equity, debt or hybrid.

The reason it is the default in India is arithmetic rather than marketing: a fixed rupee amount buys more units when the price is low and fewer when it is high, so the average cost per unit ends up below the average price over the period.

With the future value of an annuity-due: FV = P × [(1+i)^n − 1] ÷ i × (1+i), where P is the monthly amount, i is the annual rate divided by twelve, and n is the number of months.

Worked through on the default figures: ₹10,000 a month for fifteen years at 12% a year, so P = 10,000, i = 0.01 and n = 180. (1.01) raised to 180 is 5.9958. Subtract one to get 4.9958, divide by 0.01 to get 499.58, multiply by 1.01 for the start-of-month timing to get 504.58, and multiply by ₹10,000. That is ₹50.46 lakh, which is what the tool shows.

Of that ₹50.46 lakh, ₹18 lakh is money you paid in and ₹32.46 lakh is growth. Growth overtakes contributions in year 11, which is printed under the table and moves with your inputs.

It is at the optimistic end of reasonable for an equity fund over a long horizon and it is not a promise. The Nifty 50’s mean ten-year rolling return between 1 June 2013 and 30 May 2023 was 12.93%, which is the highest figure in the table AMFI publishes, and it is why illustrations in India are capped at 13%.

For a horizon under five years, or for a debt or hybrid fund, 12% is the wrong number entirely. AMFI’s own basis puts fixed income at 7.20% and a balanced 50/50 mix at about 10%. Move the rate on this page to whichever of those describes what you actually hold.

Considerably less than the headline, and this is the single most useful thing on the page. ₹50.46 lakh in fifteen years, at 6% inflation, has the purchasing power of about ₹21 lakh today. The figure is not wrong, but a reader who has been shown only the nominal number has been misled by arithmetic that was technically correct. Tick In today’s money and every figure on the page, including the table, reprices.

If the money is already in your bank account, the honest answer is that a lumpsum wins more often than not, because time in the market beats the averaging effect over most historical periods. If the money arrives as salary, the question does not exist: a SIP is the only shape available to you. What a SIP genuinely buys, beyond the arithmetic, is that it is harder to stop than it is to start, and that behavioural point does not show up in any calculator.

A great deal, and more than most people expect. Raising a ₹10,000 instalment by 10% a year for fifteen years reaches ₹86.84 lakh against ₹50.46 lakh held level, because the increases land early enough to compound. The step-up SIP calculator models that directly, and it matches what actually happens to a salary better than a flat amount does.

Yes, and it is usually the better question. Press Start from a target instead and the tool solves the annuity backwards: give it the corpus and the horizon, and it returns the monthly figure that reaches it. Almost nobody wakes up wanting to know what ₹10,000 a month becomes. They wake up wanting a number and needing to know what it costs.

On the default figures, starting twelve months from now instead of today gives up ₹6.82 lakh at the end, against ₹1.2 lakh of instalments skipped. The reason is that the year you lose is not an average year: it is the one with the most compounding left in it. The line under the result recomputes that on whatever numbers you enter.