See the estimated returns from a regular monthly SIP.
Each monthly instalment compounds for its own remaining time until maturity.
Maturity value: P × ((1+r)ⁿ − 1) ÷ r × (1+r)
A SIP return calculator splits the final value of a monthly SIP into two parts: the money you paid in and the returns that money earned. The headline figure here is the estimated returns, because that is the number people usually want to know when they ask how much a SIP has made or will make.
It is used by new investors setting expectations, by people comparing a SIP with a recurring deposit, and by anyone who wants to see how much of a large maturity figure is growth rather than their own savings.
The calculator assumes one constant annual return for the whole period. Real mutual fund NAVs rise and fall, so the answer is a projection at the rate you choose, not a promise.
1. Note the monthly SIP P, the expected annual return R% and the period in years N.
2. Find the monthly rate i = R ÷ 12 ÷ 100 and the number of instalments n = N × 12.
3. Compute the maturity value: FV = P × [((1 + i)ⁿ − 1) ÷ i] × (1 + i).
4. Compute the amount invested: P × n.
5. Subtract to get the estimated returns: returns = FV − P × n.
6. If you want the returns as a share of the corpus, divide returns by FV and multiply by 100.
The first instalment is invested for all n months, the second for n − 1 months, and the last for just one month. With payment at the start of each month, their values at maturity are P(1 + i)ⁿ, P(1 + i)ⁿ⁻¹, down to P(1 + i). This is a geometric series with ratio (1 + i). Summing it gives P(1 + i) × ((1 + i)ⁿ − 1) ÷ i, which is exactly the formula above. The extra (1 + i) factor is there because each instalment is invested at the start of its month, so it earns that month's return too.
In the early years the returns are a small slice of the corpus, because most of the money has not been invested for long. Over time the older instalments compound, and returns begin to grow faster than contributions. At 12% a year, returns on a 10-year SIP are already close to half the maturity value; stretch it to 20 years and they make up about three-quarters of it. This is why the returns figure is so sensitive to the period you enter, often more than to the monthly amount.
The rupee returns shown here are a total, not a rate. Dividing them by the total invested gives an absolute percentage that understates the yearly performance, because the average rupee was invested for only about half the period. The annual rate that actually describes a SIP is the R you entered, or, for real past SIPs, the XIRR computed from your transaction dates. Do not compare a SIP's absolute return with a lump sum's absolute return over the same years; they measure different things.
Farah wants to know how much of her ₹5,000 monthly SIP would be growth if it earns 11% a year and she keeps it going for 15 years.
Answer: Estimated returns ₹13,94,288; Maturity value ₹22,94,288; Amount invested ₹9,00,000
Treating the estimated returns as guaranteed; they depend entirely on the rate you assume.
Dividing the rupee returns by the years to get a yearly return, which ignores compounding and when each instalment was made.
Using a past five-year fund return from a strong bull market as the assumption for the next fifteen years.
Ignoring capital gains tax and expense ratio, which reduce what you actually receive.
Comparing the returns figure with an FD's interest without noting that the SIP carries market risk.
Setting realistic expectations before starting a first SIP.
Explaining to a family member how much of a maturity value is growth and how much is savings.
Checking how the returns change if you extend a SIP by a few more years.
Preparing a rough estimate of capital gains that may be taxable at redemption.
Are these returns guaranteed?
No. This shows a result based on one fixed rate you choose. Real market returns go up and down, and can even be negative in some years.