How to Calculate SIP Returns (Formula and Examples)
Short answer
SIP returns are estimated with the future value of a monthly series: FV = P × [((1 + i)n − 1) ÷ i] × (1 + i), where P is the monthly amount, i is the yearly return ÷ 12 and n is the number of months. For example, ₹5,000 a month for 10 years at an assumed 12% a year grows to about ₹11.6 lakh on ₹6 lakh invested. Our SIP calculator does the maths for you.
A systematic investment plan (SIP) puts a fixed amount into a mutual fund every month. Because each instalment is invested for a different length of time, you cannot simply multiply by a yearly return. You need the formula for a series of payments, or a calculator that applies it month by month.
What is the SIP return formula?
The standard estimate treats each instalment as money paid at the start of the month and compounded monthly:
- P = monthly SIP amount
- i = expected yearly return ÷ 12 ÷ 100 (12% a year becomes 0.01 a month)
- n = number of monthly instalments (10 years = 120)
FV = P × [((1 + i)n − 1) ÷ i] × (1 + i). The last factor, (1 + i), is there because the first instalment starts earning straight away.
Worked example: ₹5,000 a month for 10 years
With P = 5,000, i = 0.01 and n = 120, (1.01)120 is about 3.300. Subtract 1, divide by 0.01 and you get about 230.04. Multiply by 5,000 and by 1.01 and the estimate is roughly ₹11,61,695. You paid in ₹6,00,000, so the estimated gain is about ₹5,61,695. We checked these figures with the SIP calculator.
| Monthly SIP | Years | Assumed return | Invested | Estimated value |
|---|---|---|---|---|
| ₹5,000 | 10 | 12% | ₹6,00,000 | ≈ ₹11.62 lakh |
| ₹5,000 | 10 | 8% | ₹6,00,000 | ≈ ₹9.21 lakh |
| ₹5,000 | 20 | 12% | ₹12,00,000 | ≈ ₹49.96 lakh |
| ₹5,000 + 10% yearly step-up | 10 | 12% | ≈ ₹9.56 lakh | ≈ ₹16.87 lakh |
The jump from 10 to 20 years shows why time matters more than the exact rate. Doubling the period more than quadruples the estimate at 12%. The rule of 72 gives a quick check: at 12%, money roughly doubles every six years.
How does a step-up SIP change the result?
A step-up (or top-up) SIP raises the instalment once a year, often in line with a salary rise. In the example above, increasing ₹5,000 by 10% every year lifts the 10-year estimate from about ₹11.6 lakh to about ₹16.9 lakh, mostly because you invest more. Enter a step-up percentage in the calculator to see the year-by-year table.
How much SIP do I need for ₹1 crore?
Work backwards with the same formula. At an assumed 12% a year, reaching ₹1 crore in 15 years needs roughly ₹19,800 a month. At a lower assumed return the figure rises quickly, so test a cautious rate too. Our guide on how much to save each month explains how to set a realistic target.
What return should I assume?
No one can promise a mutual fund return. Equity funds can fall in some years, and past performance does not guarantee future results. Sensible habits:
- Run three cases (for example 8%, 10% and 12%) instead of one optimistic number.
- Look at the fund's own factsheet and scheme documents for its history and risk level.
- Remember costs: the expense ratio is already taken out of the fund's returns, but exit loads and taxes on gains are not.
What is the value in today's money?
₹11.6 lakh in 2036 will not buy what ₹11.6 lakh buys today. Add an inflation rate in the SIP calculator, or use the inflation calculator separately. At 5% inflation, ₹11.6 lakh in 10 years is worth about ₹7.1 lakh in today's money. Our inflation guide explains the maths.
SIP vs lump sum
A lump sum invested on day one has the whole period to compound, so in a steadily rising market it usually ends higher. A SIP spreads purchases over time (rupee cost averaging), which can soften the effect of buying at a peak. If you have a one-off amount, the compound interest calculator shows the lump-sum version; see monthly compound interest for the formula.
Disclaimer: this guide is general information, not financial, tax, legal or medical advice. ViralScopeHub is not responsible for decisions made using it; rules and rates change, so confirm with the official source or a qualified professional.
Last updated: October 16, 2026, 8:46 AM ET. Reviewed against the sources listed below.
Frequently asked questions
How is SIP return calculated?
With the future value of a monthly annuity: FV = P × [((1 + i)^n − 1) ÷ i] × (1 + i), where i is the yearly return divided by 12 and n is the number of months.
What will ₹5,000 a month in SIP become in 10 years?
At an assumed 12% a year it is about ₹11.6 lakh on ₹6 lakh invested. At 8% it is about ₹9.2 lakh. Real results depend on the fund.
Is SIP return the same as XIRR?
No. The formula estimates a future value from an assumed rate. XIRR measures the actual annual return of your past instalments and their current value.
Are SIP returns guaranteed?
No. Mutual fund investments are subject to market risk, and returns can be negative in some periods.
Does the calculator include tax?
No. Capital gains tax and exit loads depend on the fund type and holding period, so check current rules before you redeem.
