SIP Calculator

A SIP invests a fixed amount at regular intervals — typically monthly — into a mutual fund. A lump sum investment puts all your money in at once. The practical advantage of SIP is that it removes the need to time the market: you buy at different price points over time, averaging out your cost per unit. Lump sum investing can outperform SIP in a consistently rising market because all your money benefits from the full period of growth, but it also concentrates your timing risk — if you invest right before a significant market drop, recovery takes years. For most retail investors without the expertise or inclination to time markets, SIP's averaging effect makes it the more reliable approach.

Indian large-cap equity mutual funds have historically delivered roughly 10 to 14% annualized returns over long periods (10+ years), while small and mid-cap funds have sometimes returned higher but with more volatility. Debt funds tend to return 6 to 8%. For planning purposes, using 10 to 12% for equity SIPs is a reasonably conservative assumption for long time horizons — it accounts for the reality that markets don't grow linearly and some years will be negative. Don't use the calculator to optimize to the highest possible return rate; use it to understand the range of plausible outcomes.

Rupee-cost averaging is the automatic effect of investing a fixed amount regularly when asset prices fluctuate. When the market is down and unit prices are lower, your fixed ₹5,000 buys more units. When the market is up and prices are higher, it buys fewer. Over time, your average cost per unit ends up lower than the average price over the same period, because you accumulate more units at the cheaper prices. This is one of the structural advantages of a SIP — you benefit from volatility rather than being hurt by it.

Missing one or two SIP installments is generally not catastrophic for the investment itself — it just means slightly less invested that month, which has a modest long-term effect. Most mutual funds won't close your SIP after a missed payment, though some may after two or three consecutive misses. What you want to avoid is making a habit of pausing or canceling SIPs during market downturns, which is the human instinct but exactly the wrong move — those are the periods when your fixed amount buys the most units.

They share the same structure — fixed monthly contributions — but they're fundamentally different products. A recurring deposit is a bank product with a predetermined, fixed interest rate (typically 5 to 7%), making it low-risk and predictable. A SIP is an investment in mutual funds, which are market-linked: returns are not guaranteed, can fluctuate year to year, and can be negative in the short term. Over long periods equity SIPs have historically significantly outperformed RDs, but they come with more volatility. RDs are appropriate for short-term goals or capital you can't afford to see decline; SIPs are better suited for long-term wealth building.

The general recommendation is a minimum of five years, and ideally ten or more for equity SIPs. This isn't arbitrary — it's based on how equity markets behave. Over any given one or two year period, equity markets can be down significantly. Over five-year periods, the probability of positive returns in Indian equities has historically been high. Over ten-year periods, it's been very high, and the average returns have been significantly better than fixed-income alternatives. The compounding math also works best over longer horizons: the final few years of a long SIP contribute disproportionately large absolute growth because the base is so much larger.