How SIP Returns Are Calculated
A Systematic Investment Plan (SIP) lets you invest a fixed amount in mutual funds every month. Each installment buys units at the prevailing NAV, averaging out market volatility over time — a concept called rupee cost averaging.
SIP returns compound monthly. The formula used is FV = P × [((1+i)^n - 1) / i] × (1+i), where P is the monthly amount, i is the monthly return rate, and n is the number of months. Long horizons dramatically amplify returns due to compounding.
Frequently Asked Questions
Are SIP returns guaranteed?
No. SIP invests in market-linked mutual funds, so returns vary. The calculator uses an assumed annual return for estimation only.
What return rate should I assume for SIP?
Equity mutual funds have historically delivered 10%-14% annualized over long periods, though past performance does not guarantee future results.