How a SIP grows
A systematic investment plan (SIP) puts a fixed amount into a mutual fund every month. Each instalment grows for the months left until the end, so the early ones grow the most; this compounding is why the length of time matters more than the size of each payment.
The formula
The calculator takes each instalment as invested at the start of a month and growing at the monthly share of the expected yearly return. P is the monthly amount, i the monthly rate (the yearly return ÷ 12 ÷ 100) and n the number of months. A lump sum grows once a year: amount × (1 + yearly return ÷ 100) raised to the number of years.
Value = P × ((1 + i)ⁿ − 1) ÷ i × (1 + i)
Example, and a caution
₹5,000 a month for 10 years at 12% a year comes to about ₹11.6 lakh, of which ₹6 lakh is what was put in. Market-linked returns are not guaranteed: real returns rise and fall, so treat the result as an estimate, not advice.