SIP returns: invested vs earned — sample scenarios
The most important number in SIP planning isn't just the maturity value — it's how much of that is your own money vs. market returns. The table below shows how compounding shifts that ratio dramatically over time.
| SIP ₹5,000/mo @ 12% | Total Invested | Maturity Value | Wealth Gained |
|---|---|---|---|
| 5 years | ₹3.0L | ₹4.1L | ₹1.1L (37%) |
| 10 years | ₹6.0L | ₹11.6L | ₹5.6L (93%) |
| 15 years | ₹9.0L | ₹25.2L | ₹16.2L (180%) |
| 20 years | ₹12.0L | ₹49.5L | ₹37.5L (312%) |
| 25 years | ₹15.0L | ₹94.7L | ₹79.7L (531%) |
The SIP return formula explained
The standard SIP future value formula is: M = P × [{(1 + r)^n – 1} / r] × (1 + r) where M = maturity amount, P = monthly SIP installment, r = monthly interest rate (annual rate ÷ 12), n = total number of installments (years × 12). The key insight: each installment compounds from its own investment date, so earlier installments compound for longer and contribute more to total returns.
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How to read your SIP return results
The Total Invested figure is simply: monthly amount × number of months. This is money that came from your pocket — guaranteed, regardless of market performance.
The Maturity Value is what you'd receive if the fund delivered the exact expected return rate throughout the tenure. Markets fluctuate, so actual results can be higher or lower.
The Wealth Gained is Maturity Value minus Total Invested — your actual profit from compounding. As the tables above show, this number becomes enormous over 15–25 year horizons, which is why time in the market matters far more than timing the market.
Frequently asked questions
What is a good SIP return rate to expect in India?
Historically, diversified equity mutual funds in India have delivered 12–15% CAGR over 10-year periods. Large-cap index funds (Nifty 50) have given about 12% long-term. Mid and small-cap funds are higher but more volatile. For planning, 10–12% is a reasonable conservative estimate for equity SIPs.
How is SIP return different from CAGR?
CAGR (Compound Annual Growth Rate) measures the return of a lump sum investment from start to end. SIP return (XIRR) accounts for the fact that each monthly installment is invested at a different time. Most fund factsheets show CAGR — but for your SIP portfolio, XIRR is the accurate return metric.
Are SIP returns taxable in India?
Yes. For equity mutual funds: gains are taxed at 10% if held over 1 year (LTCG) for gains above ₹1 lakh per year, and 15% if held under 1 year (STCG). For debt funds: taxed at your income slab rate regardless of holding period (post April 2023 budget change).