What is SIP (Systematic Investment Plan)?

SIP or Systematic Investment Plan is a method of investing a fixed amount regularly in mutual funds. It allows investors to invest small amounts monthly, benefiting from rupee cost averaging and compound interest over time. SIP is one of the most popular investment methods in India for building long-term wealth.

How is SIP return calculated?

SIP returns are calculated using compound interest formula. Each monthly investment grows at the expected rate of return. The formula considers the number of months invested and compounds returns monthly. The future value is calculated as: FV = P × [(1+r)^n - 1] / r × (1+r), where P is monthly investment, r is monthly rate, and n is number of months.

What is Step-Up SIP or Top-Up SIP?

Step-Up SIP (also called Top-Up SIP) is where you increase your SIP amount annually by a fixed percentage. For example, with 10% step-up, if you start with Rs.10,000 monthly SIP, it becomes Rs.11,000 in year 2, Rs.12,100 in year 3, and so on. This helps beat inflation and significantly accelerates wealth creation over long periods.

What is a good SIP amount to start with in India?

You can start SIP with as low as Rs.500 per month in most mutual funds. However, the ideal amount depends on your income and financial goals. A common guideline is to invest 20-30% of your monthly income. For beginners, starting with Rs.5,000-10,000 per month and gradually increasing through step-up SIP is recommended.

What returns can I expect from SIP in mutual funds?

Historical data shows equity mutual funds in India have delivered 10-15% annual returns over long periods (10+ years). Large-cap funds typically give 10-12%, mid-cap 12-15%, and small-cap can give higher but with more risk. Debt funds typically give 6-8% returns. However, returns are not guaranteed and depend on market conditions.

Is SIP better than lump sum investment?

SIP offers rupee cost averaging - you buy more units when prices are low and fewer when high, reducing average cost over time. It also instills investment discipline and is easier for salaried individuals. Lump sum may give better returns if invested at market lows, but timing the market is difficult. For most investors, SIP is recommended as it reduces market timing risk.

How long should I continue SIP for best results?

For equity mutual funds, a minimum of 5-7 years is recommended to ride out market volatility. For long-term goals like retirement or children's education, 15-25+ years of SIP can create substantial wealth through the power of compounding. The longer the duration, the greater the compounding benefit - a 25-year SIP can generate 3-4x more wealth than a 15-year SIP.

Are SIP returns taxable in India?

Yes, SIP returns are taxable in India. For equity funds held over 1 year, Long Term Capital Gains (LTCG) above Rs.1.25 lakh per year are taxed at 12.5%. Short-term gains (held less than 1 year) are taxed at 20%. For debt funds, gains are taxed as per your income tax slab. Each SIP installment is treated separately for calculating holding period.

SIP Calculator India • webnotes.in

SIP Calculator India – Free Systematic Investment Plan Calculator with Step-Up

Monthly SIP (₹)

₹500₹1,00,000

Annual Step-Up (%)

0%25%

Expected Return (% p.a.)

1%30%

Investment Period (Years)

1 Yr40 Yrs

Investment Dashboard

Your SIP growth summary

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How to use this calculator: Enter your monthly SIP amount, expected return rate (12% is typical for equity mutual funds), and investment duration. Use the step-up option to increase your SIP annually and accelerate wealth creation.

Disclaimer: This calculator provides estimates based on assumed constant returns. Actual mutual fund returns vary and are subject to market risks. Past performance does not guarantee future results. Please consult a financial advisor before investing.