Personal Finance
How a SIP Calculator Works
Direct answer
A SIP (Systematic Investment Plan) calculator projects the future value of a fixed monthly investment by compounding each instalment at an assumed monthly return until the end of the chosen duration. It is a projection based on an assumed constant return, not a guarantee — real mutual fund returns vary month to month.
Key takeaways
- The formula assumes the same monthly return every month for the full duration — real returns fluctuate.
- Total invested is simply monthly amount × number of months.
- Wealth gained is the future value minus total invested.
- A higher assumed annual return or longer duration has a compounding, not linear, effect on the result.
The formula
Each monthly instalment compounds at the monthly rate (annual rate ÷ 12) for the remaining months until the end of the investment period. Summed across all instalments, this gives the standard SIP future-value formula used by mutual fund platforms.
Worked example: Rs 10,000/month for 10 years at 15%
Investing Rs 10,000 every month for 10 years (120 months) at an assumed 15% annual return grows to approximately Rs 27,86,573. Total invested over that period is Rs 12,00,000, meaning the projected gain from compounding is approximately Rs 15,86,573 — more than the amount invested.
Why the actual outcome will differ
Mutual fund and stock-market returns are never a fixed monthly rate — some months are negative, some far exceed the average. This calculator is useful for comparing scenarios (different amounts, durations or assumed rates) side by side, not for predicting an exact future balance.
Original reference table
Rs 10,000/month at 15% assumed annual return
| Duration | Total invested | Projected future value | Projected gain |
|---|---|---|---|
| 5 years | Rs 6,00,000 | ≈ Rs 8,99,320 | ≈ Rs 2,99,320 |
| 10 years | Rs 12,00,000 | ≈ Rs 27,86,573 | ≈ Rs 15,86,573 |
| 20 years | Rs 24,00,000 | ≈ Rs 1,51,59,550 | ≈ Rs 1,27,59,550 |
Want your own estimate?
Use the transparent calculator
Enter your figures and see the formula, assumptions and result.
Useful questions
Quick answers
Does a SIP calculator guarantee this return?
No. It projects an outcome assuming a constant annual return you choose — actual mutual fund performance varies and can be lower or higher.
Can I use this for a Pakistani mutual fund SIP?
Yes, the formula is a standard compound-interest calculation used industry-wide; simply enter the amount, an assumed annual return and the duration you're comparing.
Sources & references
How this guide was checked
Seedha Hisab
Standard compound-interest SIP formula
Used industry-wide by mutual fund SIP calculators; not specific to any single fund or asset management company.
Found outdated information? Report a correction. Seedha Hisab publishes educational estimates, not personalised tax, legal or religious advice.
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Editorial owner: Seedha Hisab Editorial. No invented expert reviewer or government affiliation.
Update history: 18 September 2026 — guide created or verified against the source and methodology shown above.