Free SIP & Compound Interest Calculator (2026)
Forecast your future mutual fund wealth, invested capital, and compounding returns based on monthly SIP deposits.
The Power of Systematic Investment Plans (SIP) & Compounding Interest
A Systematic Investment Plan (SIP) is a disciplined approach to investing fixed sums of money at regular monthly intervals into mutual funds or index funds. Instead of attempting to time volatile market peaks and troughs, SIP investors benefit from Rupee Cost Averaging and the exponential power of compound interest.
1. The SIP Compounding Formula Explained
The future value of a Systematic Investment Plan is calculated using the following mathematical formula:
M = P × [((1 + i)^n − 1) ÷ i] × (1 + i)
- M: Future maturity amount received.
- P: Amount invested each month (SIP deposit).
- i: Periodic rate of interest (Annual expected return ÷ 12 ÷ 100).
- n: Total number of monthly deposits (Years × 12).
2. Why Time in the Market Beats Timing the Market
Notice what happens as the investment duration extends from 10 years to 20 years: because interest earns interest on an expanding principal base, your wealth growth accelerates dramatically in the second decade. Starting a ₹5,000 monthly SIP just 5 years earlier can double your eventual retirement corpus.
Frequently Asked Questions (FAQ)
What is a realistic expected return rate for equity mutual funds in India?
Historically, diversified Indian equity mutual funds and Nifty 50 index funds have delivered long-term annualized returns between 11% and 14% over 10+ year horizons.
Can I pause or increase my monthly SIP amount?
Yes. Mutual fund SIPs are highly flexible. You can pause, stop, or step up your monthly contribution at any time without financial penalties.