See how your monthly investments grow into wealth through the power of compounding
Comparing ₹10,000/month SIP at 12% for 15 years vs equivalent lump sum vs fixed deposit:
Lump sum assumes total SIP amount invested at start. All values are approximate estimates for illustration purposes.
A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly — typically monthly — into a mutual fund scheme. Instead of trying to time the market with a large lump sum, SIP lets you invest small amounts consistently over time, benefiting from rupee cost averaging and the power of compounding.
SIP returns are calculated using the future value of an annuity formula:
Where: M = Maturity value | P = Monthly SIP amount | i = Monthly interest rate (Annual rate ÷ 12 ÷ 100) | n = Number of monthly instalments
When markets fall, your fixed SIP buys more mutual fund units. When markets rise, fewer units are bought. Over time, this averages out your purchase cost — you naturally buy more when it's cheap and less when it's expensive. This makes SIP especially powerful for volatile markets like India's equity market.
Large-cap equity funds: Historically delivered 10–12% CAGR over 10+ years. Mid-cap funds: 12–15% CAGR over long periods, with higher volatility. Debt funds: 6–8% CAGR, much lower risk. Hybrid/balanced funds: 9–11% CAGR. Our calculator uses 12% as a default, which is a reasonable long-term estimate for diversified equity mutual funds, though past returns don't guarantee future results.
Consider two investors: Riya starts a ₹5,000/month SIP at age 25 and stops at 35 (10 years). Rahul starts at 35 and continues until 60 (25 years). Assuming 12% returns, Riya ends up with more money at 60 despite investing for only 10 years — because she started 10 years earlier. This is the power of compounding: time in the market matters more than the amount invested.