How a SIP is calculated
A SIP (Systematic Investment Plan) is a fixed contribution made at regular intervals. Because each instalment is invested at a different time, each one compounds for a different length of time — the first for the full period, the last for barely a month.
The standard future-value formula for a series of month-end contributions is shown below, where M is the monthly contribution, i is the monthly rate (the annual rate you assume, divided by 12) and n is the number of months.
FV = M × ((1 + i)^n − 1) / i
The return is your assumption, not ours
This calculator does not supply a rate of return, and Muktify never will. Muktify is an educational calculator, not a SEBI-registered adviser: we do not name funds, rank instruments, or tell you what any investment will earn.
The rate you enter is your own assumption about the future, and the output is only as realistic as that assumption. Markets do not deliver a smooth annual figure — a projection is arithmetic on a steady rate, not a forecast. Try a range of rates to see how wide the outcome actually is.
Why time matters more than the amount
Compounding is non-linear: the growth in the final years dwarfs the early ones, because returns are earning returns on a much larger base. Extending the period is usually more powerful than raising the contribution by a similar proportion.
The chart on this page separates the money you put in from the growth on top, which makes the crossover visible — the point at which accumulated growth exceeds total contributions.
How is SIP return calculated?+
Each instalment compounds for the time remaining until the end of the period, so the total is the sum of every instalment grown separately. The closed form is FV = M × ((1 + i)^n − 1) / i, where M is the monthly amount, i is the monthly rate and n is the number of months.
What rate of return should I assume for a SIP?+
Muktify does not supply one. We are an educational calculator, not a SEBI-registered adviser, so the expected return is always your own input and is clearly labelled as your assumption. Entering a range of rates rather than a single figure gives a more honest picture.
Is a SIP calculator result guaranteed?+
No. It is arithmetic on a constant rate you supplied. Real returns vary year to year and can be negative, so the output is an estimate that shows how compounding behaves — not a prediction of what you will receive.
Why does the final year add so much more than the first?+
Because returns compound on an ever-larger balance. In the early years growth is applied to a small base; by the final years it is applied to the accumulated total, so the same percentage produces a far bigger absolute increase.
Is it better to increase my SIP amount or invest for longer?+
Mathematically, additional time usually has a larger effect than a proportionally similar increase in contribution, because time enters the formula as an exponent. Which is feasible for you is your own decision — the calculator just shows both.
What happens if I stop my SIP midway?+
Contributions stop, but whatever has already accumulated continues to be exposed to whatever it is invested in — it does not reset. The shortfall against your original projection comes from both the missing instalments and the growth those instalments would have compounded, which is why pausing early costs more than pausing late.
How does a SIP differ from investing a lump sum?+
A lump sum is exposed to the full period from day one, so on a single steady rate it always ends higher than the same total contributed gradually. A SIP spreads entry across many different prices instead. The calculator models the instalment case; neither structure is presented here as preferable.
What is a step-up SIP?+
One where the contribution rises by a set amount or percentage each year, usually to track income growth. Because the later instalments are larger but compound for less time, the outcome sits between a flat SIP of the starting amount and a flat SIP of the final amount.
Why does my SIP value fall in some months even though I keep contributing?+
Because the value of what you hold moves independently of what you pay in. This calculator applies one steady rate every month, which real markets do not do — that smoothness is the main way a projection differs from an actual statement.