How SIP compounding works — the simple math
SIP returns are calculated using the compound interest formula applied monthly. Each installment grows independently from when it's invested, and all installments compound together over time. This is why starting early — even with a small amount — creates significantly more wealth than starting late with a large amount.
| Monthly SIP | 10 Years @ 12% | 15 Years @ 12% | 20 Years @ 12% |
|---|---|---|---|
| ₹2,000 | ₹4.6L | ₹10L | ₹19.8L |
| ₹5,000 | ₹11.6L | ₹25.2L | ₹49.5L |
| ₹10,000 | ₹23.2L | ₹50.4L | ₹99L |
| ₹15,000 | ₹34.8L | ₹75.6L | ₹1.49Cr |
| ₹25,000 | ₹58L | ₹1.26Cr | ₹2.48Cr |
What return rate should you use?
The right return assumption depends on the type of mutual fund you're investing in. Equity funds have delivered 12–15% historically but are volatile. Debt funds are more stable at 6–8%. For long-term planning, use a conservative assumption to avoid disappointment.
| Fund Type | Conservative Estimate | Historical Average | Best Case |
|---|---|---|---|
| Large-cap equity | 10% | 12% | 15% |
| Mid-cap equity | 11% | 14% | 18% |
| Small-cap equity | 12% | 16% | 22% |
| Balanced / Hybrid | 9% | 11% | 14% |
| Debt / Liquid | 6% | 7% | 8% |
| ELSS (tax saving) | 10% | 13% | 17% |
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How to use this SIP calculator (3 steps)
Enter your Monthly Investment — this is the fixed amount you will invest every month. Common starting points in India: ₹500, ₹1,000, ₹2,000, ₹5,000.
Set your Expected Annual Return based on the fund type you plan to invest in. Use 12% for equity funds as a reasonable baseline.
Choose your Investment Duration in years. The longer you stay invested, the bigger the compounding effect. See your maturity value, total invested, and total wealth gain instantly.
Frequently asked questions
What is the minimum SIP amount in India?
Most mutual funds in India allow SIPs starting from ₹100 per month. Popular platforms like Groww, Zerodha Coin, and Paytm Money support ₹100 SIPs. Some ELSS tax-saving funds start at ₹500/month.
Can I stop a SIP midway?
Yes. Unlike insurance policies, SIPs have no lock-in (except ELSS which has a 3-year lock-in per installment). You can pause, reduce, increase, or stop a SIP anytime without penalties in most mutual fund schemes.
Is SIP better than a fixed deposit?
For long-term goals (5+ years), equity SIPs have historically delivered significantly higher returns than FDs. FDs give 6–7% guaranteed but are fully taxable. Equity SIP gains above ₹1 lakh/year are taxed at 10% (LTCG). For short-term goals, FDs are safer and more predictable.
What happens if I miss a SIP payment?
Most funds allow 2–3 missed installments before automatically cancelling the SIP. Missing one payment typically doesn't result in any penalty — the fund just skips that month. You can also pause a SIP formally through your fund house or platform.