SIP investments are not taxable, but the gains earned on redemption may be subject to capital gains tax.

SIP is considered a disciplined investment method, but returns depend on the performance of the underlying mutual fund.

SIP Calculator

Q: What is the ideal SIP amount for beginners?

The ideal SIP amount depends on your income and goals, but beginners can start with a small amount, such as ₹500–₹2,000 per month, and gradually increase it as income grows.

Q: Can I run multiple SIPs at the same time?

Yes, you can invest in multiple SIPs across different mutual funds. This helps diversify your portfolio and align investments with different financial goals.

Q: How does SIP behave during a market crash?

During a market decline, SIP invests at lower prices, allowing you to accumulate more units. This can improve long-term returns when markets recover.

Q: What is SIP frequency, and which option is best?

SIP frequency refers to how often you invest (monthly, weekly, quarterly). Monthly SIPs are the most popular because they align with salary cycles and simplify budgeting.

Q: Can SIP be used for short-term goals?

SIP is generally better suited for long-term goals. For short-term goals (less than 3 years), low-risk options like debt funds or fixed deposits are more suitable.

Q: How accurate is a SIP calculator?

A SIP calculator provides a close estimate based on the inputs entered, but actual returns may vary depending on market performance.

Q: Can SIP returns be guaranteed?

No, SIP returns are market-linked and cannot be guaranteed.

Q: What is the ideal SIP tenure?

A SIP tenure of 5 years or more is generally recommended to benefit from long-term compounding.

Q: Can I stop SIP anytime?

Yes, most SIPs can be stopped, paused, or modified at any time without penalties.

SIP

Lumpsum

Sip Frequency

SIP Amount

₹

Expected Rate of Return (p.a)

Add Inflation

SIP Tenure

YearsMonthsDays

Invested Amount

₹27,00,000

Expected Returns

₹74,52,946.41

Total Value

₹1,01,52,946.41

85% of ITR filers saved more with Cleartax Expert.

Year-wise investment schedule

2026

Period	Invested amount	Expected Returns	Total value
Jan	15,000	188	15,188
Feb	30,000	565	30,565
Mar	45,000	1,134	46,134
Apr	60,000	1,899	61,899
May	75,000	2,860	77,860
Jun	90,000	4,021	94,021
Jul	1,05,000	5,383	1,10,383
Aug	1,20,000	6,951	1,26,951
Sep	1,35,000	8,725	1,43,725
Oct	1,50,000	10,709	1,60,709
Nov	1,65,000	12,905	1,77,905
Dec	1,80,000	15,317	1,95,317

2027

Period	Invested amount	Expected Returns	Total value
Jan	1,95,000	17,946	2,12,946
Feb	2,10,000	20,795	2,30,795
Mar	2,25,000	23,867	2,48,867
Apr	2,40,000	27,166	2,67,166
May	2,55,000	30,693	2,85,693
Jun	2,70,000	34,452	3,04,452
Jul	2,85,000	38,445	3,23,445
Aug	3,00,000	42,675	3,42,675
Sep	3,15,000	47,146	3,62,146
Oct	3,30,000	51,861	3,81,861
Nov	3,45,000	56,821	4,01,821
Dec	3,60,000	62,032	4,22,032

2028

Period	Invested amount	Expected Returns	Total value
Jan	3,75,000	67,494	4,42,494
Feb	3,90,000	73,213	4,63,213
Mar	4,05,000	79,191	4,84,191
Apr	4,20,000	85,431	5,05,431
May	4,35,000	91,936	5,26,936
Jun	4,50,000	98,710	5,48,710
Jul	4,65,000	1,05,757	5,70,757
Aug	4,80,000	1,13,079	5,93,079
Sep	4,95,000	1,20,680	6,15,680
Oct	5,10,000	1,28,563	6,38,563
Nov	5,25,000	1,36,733	6,61,733
Dec	5,40,000	1,45,192	6,85,192

2029

Period	Invested amount	Expected Returns	Total value
Jan	5,55,000	1,53,944	7,08,944
Feb	5,70,000	1,62,993	7,32,993
Mar	5,85,000	1,72,343	7,57,343
Apr	6,00,000	1,81,998	7,81,998
May	6,15,000	1,91,960	8,06,960
Jun	6,30,000	2,02,235	8,32,235
Jul	6,45,000	2,12,825	8,57,825
Aug	6,60,000	2,23,735	8,83,735
Sep	6,75,000	2,34,970	9,09,970
Oct	6,90,000	2,46,532	9,36,532
Nov	7,05,000	2,58,426	9,63,426
Dec	7,20,000	2,70,656	9,90,656

2030

Period	Invested amount	Expected Returns	Total value
Jan	7,35,000	2,83,227	10,18,227
Feb	7,50,000	2,96,142	10,46,142
Mar	7,65,000	3,09,406	10,74,406
Apr	7,80,000	3,23,024	11,03,024
May	7,95,000	3,36,999	11,31,999
Jun	8,10,000	3,51,337	11,61,337
Jul	8,25,000	3,66,041	11,91,041
Aug	8,40,000	3,81,117	12,21,117
Sep	8,55,000	3,96,568	12,51,568
Oct	8,70,000	4,12,400	12,82,400
Nov	8,85,000	4,28,618	13,13,618
Dec	9,00,000	4,45,225	13,45,225

2031

Period	Invested amount	Expected Returns	Total value
Jan	9,15,000	4,62,228	13,77,228
Feb	9,30,000	4,79,631	14,09,631
Mar	9,45,000	4,97,439	14,42,439
Apr	9,60,000	5,15,657	14,75,657
May	9,75,000	5,34,290	15,09,290
Jun	9,90,000	5,53,344	15,43,344
Jul	10,05,000	5,72,823	15,77,823
Aug	10,20,000	5,92,733	16,12,733
Sep	10,35,000	6,13,080	16,48,080
Oct	10,50,000	6,33,868	16,83,868
Nov	10,65,000	6,55,104	17,20,104
Dec	10,80,000	6,76,793	17,56,793

2032

Period	Invested amount	Expected Returns	Total value
Jan	10,95,000	6,98,941	17,93,941
Feb	11,10,000	7,21,552	18,31,552
Mar	11,25,000	7,44,634	18,69,634
Apr	11,40,000	7,68,192	19,08,192
May	11,55,000	7,92,232	19,47,232
Jun	11,70,000	8,16,760	19,86,760
Jul	11,85,000	8,41,782	20,26,782
Aug	12,00,000	8,67,304	20,67,304
Sep	12,15,000	8,93,333	21,08,333
Oct	12,30,000	9,19,875	21,49,875
Nov	12,45,000	9,46,936	21,91,936
Dec	12,60,000	9,74,522	22,34,522

2033

Period	Invested amount	Expected Returns	Total value
Jan	12,75,000	10,02,641	22,77,641
Feb	12,90,000	10,31,299	23,21,299
Mar	13,05,000	10,60,503	23,65,503
Apr	13,20,000	10,90,259	24,10,259
May	13,35,000	11,20,575	24,55,575
Jun	13,50,000	11,51,457	25,01,457
Jul	13,65,000	11,82,913	25,47,913
Aug	13,80,000	12,14,949	25,94,949
Sep	13,95,000	12,47,574	26,42,574
Oct	14,10,000	12,80,793	26,90,793
Nov	14,25,000	13,14,616	27,39,616
Dec	14,40,000	13,49,049	27,89,049

2034

Period	Invested amount	Expected Returns	Total value
Jan	14,55,000	13,84,099	28,39,099
Feb	14,70,000	14,19,775	28,89,775
Mar	14,85,000	14,56,085	29,41,085
Apr	15,00,000	14,93,036	29,93,036
May	15,15,000	15,30,637	30,45,637
Jun	15,30,000	15,68,895	30,98,895
Jul	15,45,000	16,07,818	31,52,818
Aug	15,60,000	16,47,416	32,07,416
Sep	15,75,000	16,87,696	32,62,696
Oct	15,90,000	17,28,667	33,18,667
Nov	16,05,000	17,70,338	33,75,338
Dec	16,20,000	18,12,717	34,32,717

2035

Period	Invested amount	Expected Returns	Total value
Jan	16,35,000	18,55,814	34,90,814
Feb	16,50,000	18,99,637	35,49,637
Mar	16,65,000	19,44,195	36,09,195
Apr	16,80,000	19,89,497	36,69,497
May	16,95,000	20,35,553	37,30,553
Jun	17,10,000	20,82,373	37,92,373
Jul	17,25,000	21,29,965	38,54,965
Aug	17,40,000	21,78,339	39,18,339
Sep	17,55,000	22,27,506	39,82,506
Oct	17,70,000	22,77,475	40,47,475
Nov	17,85,000	23,28,256	41,13,256
Dec	18,00,000	23,79,859	41,79,859

2036

Period	Invested amount	Expected Returns	Total value
Jan	18,15,000	24,32,295	42,47,295
Feb	18,30,000	24,85,574	43,15,574
Mar	18,45,000	25,39,706	43,84,706
Apr	18,60,000	25,94,702	44,54,702
May	18,75,000	26,50,573	45,25,573
Jun	18,90,000	27,07,330	45,97,330
Jul	19,05,000	27,64,985	46,69,985
Aug	19,20,000	28,23,547	47,43,547
Sep	19,35,000	28,83,029	48,18,029
Oct	19,50,000	29,43,442	48,93,442
Nov	19,65,000	30,04,797	49,69,797
Dec	19,80,000	30,67,107	50,47,107

2037

Period	Invested amount	Expected Returns	Total value
Jan	19,95,000	31,30,383	51,25,383
Feb	20,10,000	31,94,638	52,04,638
Mar	20,25,000	32,59,884	52,84,884
Apr	20,40,000	33,26,132	53,66,132
May	20,55,000	33,93,396	54,48,396
Jun	20,70,000	34,61,689	55,31,689
Jul	20,85,000	35,31,022	56,16,022
Aug	21,00,000	36,01,410	57,01,410
Sep	21,15,000	36,72,865	57,87,865
Oct	21,30,000	37,45,401	58,75,401
Nov	21,45,000	38,19,031	59,64,031
Dec	21,60,000	38,93,769	60,53,769

2038

Period	Invested amount	Expected Returns	Total value
Jan	21,75,000	39,69,629	61,44,629
Feb	21,90,000	40,46,624	62,36,624
Mar	22,05,000	41,24,769	63,29,769
Apr	22,20,000	42,04,079	64,24,079
May	22,35,000	42,84,567	65,19,567
Jun	22,50,000	43,66,250	66,16,250
Jul	22,65,000	44,49,140	67,14,140
Aug	22,80,000	45,33,254	68,13,254
Sep	22,95,000	46,18,608	69,13,608
Oct	23,10,000	47,05,215	70,15,215
Nov	23,25,000	47,93,093	71,18,093
Dec	23,40,000	48,82,257	72,22,257

2039

Period	Invested amount	Expected Returns	Total value
Jan	23,55,000	49,72,722	73,27,722
Feb	23,70,000	50,64,506	74,34,506
Mar	23,85,000	51,57,625	75,42,625
Apr	24,00,000	52,52,095	76,52,095
May	24,15,000	53,47,934	77,62,934
Jun	24,30,000	54,45,158	78,75,158
Jul	24,45,000	55,43,785	79,88,785
Aug	24,60,000	56,43,833	81,03,833
Sep	24,75,000	57,45,318	82,20,318
Oct	24,90,000	58,48,259	83,38,259
Nov	25,05,000	59,52,675	84,57,675
Dec	25,20,000	60,58,584	85,78,584

2040

Period	Invested amount	Expected Returns	Total value
Jan	25,35,000	61,66,003	87,01,003
Feb	25,50,000	62,74,953	88,24,953
Mar	25,65,000	63,85,453	89,50,453
Apr	25,80,000	64,97,521	90,77,521
May	25,95,000	66,11,178	92,06,178
Jun	26,10,000	67,26,442	93,36,442
Jul	26,25,000	68,43,335	94,68,335
Aug	26,40,000	69,61,877	96,01,877
Sep	26,55,000	70,82,088	97,37,088
Oct	26,70,000	72,03,989	98,73,989
Nov	26,85,000	73,27,601	1,00,12,601
Dec	27,00,000	74,52,946	1,01,52,946

Year-wise investment schedule

2026

Period	Invested amount	Expected Returns	Total value
Jan	15,000	188	15,188
Feb	30,000	565	30,565
Mar	45,000	1,134	46,134
Apr	60,000	1,899	61,899
May	75,000	2,860	77,860
Jun	90,000	4,021	94,021
Jul	1,05,000	5,383	1,10,383
Aug	1,20,000	6,951	1,26,951
Sep	1,35,000	8,725	1,43,725
Oct	1,50,000	10,709	1,60,709
Nov	1,65,000	12,905	1,77,905
Dec	1,80,000	15,317	1,95,317

2027

Period	Invested amount	Expected Returns	Total value
Jan	1,95,000	17,946	2,12,946
Feb	2,10,000	20,795	2,30,795
Mar	2,25,000	23,867	2,48,867
Apr	2,40,000	27,166	2,67,166
May	2,55,000	30,693	2,85,693
Jun	2,70,000	34,452	3,04,452
Jul	2,85,000	38,445	3,23,445
Aug	3,00,000	42,675	3,42,675
Sep	3,15,000	47,146	3,62,146
Oct	3,30,000	51,861	3,81,861
Nov	3,45,000	56,821	4,01,821
Dec	3,60,000	62,032	4,22,032

2028

Period	Invested amount	Expected Returns	Total value
Jan	3,75,000	67,494	4,42,494
Feb	3,90,000	73,213	4,63,213
Mar	4,05,000	79,191	4,84,191
Apr	4,20,000	85,431	5,05,431
May	4,35,000	91,936	5,26,936
Jun	4,50,000	98,710	5,48,710
Jul	4,65,000	1,05,757	5,70,757
Aug	4,80,000	1,13,079	5,93,079
Sep	4,95,000	1,20,680	6,15,680
Oct	5,10,000	1,28,563	6,38,563
Nov	5,25,000	1,36,733	6,61,733
Dec	5,40,000	1,45,192	6,85,192

2029

Period	Invested amount	Expected Returns	Total value
Jan	5,55,000	1,53,944	7,08,944
Feb	5,70,000	1,62,993	7,32,993
Mar	5,85,000	1,72,343	7,57,343
Apr	6,00,000	1,81,998	7,81,998
May	6,15,000	1,91,960	8,06,960
Jun	6,30,000	2,02,235	8,32,235
Jul	6,45,000	2,12,825	8,57,825
Aug	6,60,000	2,23,735	8,83,735
Sep	6,75,000	2,34,970	9,09,970
Oct	6,90,000	2,46,532	9,36,532
Nov	7,05,000	2,58,426	9,63,426
Dec	7,20,000	2,70,656	9,90,656

2030

Period	Invested amount	Expected Returns	Total value
Jan	7,35,000	2,83,227	10,18,227
Feb	7,50,000	2,96,142	10,46,142
Mar	7,65,000	3,09,406	10,74,406
Apr	7,80,000	3,23,024	11,03,024
May	7,95,000	3,36,999	11,31,999
Jun	8,10,000	3,51,337	11,61,337
Jul	8,25,000	3,66,041	11,91,041
Aug	8,40,000	3,81,117	12,21,117
Sep	8,55,000	3,96,568	12,51,568
Oct	8,70,000	4,12,400	12,82,400
Nov	8,85,000	4,28,618	13,13,618
Dec	9,00,000	4,45,225	13,45,225

2031

Period	Invested amount	Expected Returns	Total value
Jan	9,15,000	4,62,228	13,77,228
Feb	9,30,000	4,79,631	14,09,631
Mar	9,45,000	4,97,439	14,42,439
Apr	9,60,000	5,15,657	14,75,657
May	9,75,000	5,34,290	15,09,290
Jun	9,90,000	5,53,344	15,43,344
Jul	10,05,000	5,72,823	15,77,823
Aug	10,20,000	5,92,733	16,12,733
Sep	10,35,000	6,13,080	16,48,080
Oct	10,50,000	6,33,868	16,83,868
Nov	10,65,000	6,55,104	17,20,104
Dec	10,80,000	6,76,793	17,56,793

2032

Period	Invested amount	Expected Returns	Total value
Jan	10,95,000	6,98,941	17,93,941
Feb	11,10,000	7,21,552	18,31,552
Mar	11,25,000	7,44,634	18,69,634
Apr	11,40,000	7,68,192	19,08,192
May	11,55,000	7,92,232	19,47,232
Jun	11,70,000	8,16,760	19,86,760
Jul	11,85,000	8,41,782	20,26,782
Aug	12,00,000	8,67,304	20,67,304
Sep	12,15,000	8,93,333	21,08,333
Oct	12,30,000	9,19,875	21,49,875
Nov	12,45,000	9,46,936	21,91,936
Dec	12,60,000	9,74,522	22,34,522

2033

Period	Invested amount	Expected Returns	Total value
Jan	12,75,000	10,02,641	22,77,641
Feb	12,90,000	10,31,299	23,21,299
Mar	13,05,000	10,60,503	23,65,503
Apr	13,20,000	10,90,259	24,10,259
May	13,35,000	11,20,575	24,55,575
Jun	13,50,000	11,51,457	25,01,457
Jul	13,65,000	11,82,913	25,47,913
Aug	13,80,000	12,14,949	25,94,949
Sep	13,95,000	12,47,574	26,42,574
Oct	14,10,000	12,80,793	26,90,793
Nov	14,25,000	13,14,616	27,39,616
Dec	14,40,000	13,49,049	27,89,049

2034

Period	Invested amount	Expected Returns	Total value
Jan	14,55,000	13,84,099	28,39,099
Feb	14,70,000	14,19,775	28,89,775
Mar	14,85,000	14,56,085	29,41,085
Apr	15,00,000	14,93,036	29,93,036
May	15,15,000	15,30,637	30,45,637
Jun	15,30,000	15,68,895	30,98,895
Jul	15,45,000	16,07,818	31,52,818
Aug	15,60,000	16,47,416	32,07,416
Sep	15,75,000	16,87,696	32,62,696
Oct	15,90,000	17,28,667	33,18,667
Nov	16,05,000	17,70,338	33,75,338
Dec	16,20,000	18,12,717	34,32,717

2035

Period	Invested amount	Expected Returns	Total value
Jan	16,35,000	18,55,814	34,90,814
Feb	16,50,000	18,99,637	35,49,637
Mar	16,65,000	19,44,195	36,09,195
Apr	16,80,000	19,89,497	36,69,497
May	16,95,000	20,35,553	37,30,553
Jun	17,10,000	20,82,373	37,92,373
Jul	17,25,000	21,29,965	38,54,965
Aug	17,40,000	21,78,339	39,18,339
Sep	17,55,000	22,27,506	39,82,506
Oct	17,70,000	22,77,475	40,47,475
Nov	17,85,000	23,28,256	41,13,256
Dec	18,00,000	23,79,859	41,79,859

2036

Period	Invested amount	Expected Returns	Total value
Jan	18,15,000	24,32,295	42,47,295
Feb	18,30,000	24,85,574	43,15,574
Mar	18,45,000	25,39,706	43,84,706
Apr	18,60,000	25,94,702	44,54,702
May	18,75,000	26,50,573	45,25,573
Jun	18,90,000	27,07,330	45,97,330
Jul	19,05,000	27,64,985	46,69,985
Aug	19,20,000	28,23,547	47,43,547
Sep	19,35,000	28,83,029	48,18,029
Oct	19,50,000	29,43,442	48,93,442
Nov	19,65,000	30,04,797	49,69,797
Dec	19,80,000	30,67,107	50,47,107

2037

Period	Invested amount	Expected Returns	Total value
Jan	19,95,000	31,30,383	51,25,383
Feb	20,10,000	31,94,638	52,04,638
Mar	20,25,000	32,59,884	52,84,884
Apr	20,40,000	33,26,132	53,66,132
May	20,55,000	33,93,396	54,48,396
Jun	20,70,000	34,61,689	55,31,689
Jul	20,85,000	35,31,022	56,16,022
Aug	21,00,000	36,01,410	57,01,410
Sep	21,15,000	36,72,865	57,87,865
Oct	21,30,000	37,45,401	58,75,401
Nov	21,45,000	38,19,031	59,64,031
Dec	21,60,000	38,93,769	60,53,769

2038

Period	Invested amount	Expected Returns	Total value
Jan	21,75,000	39,69,629	61,44,629
Feb	21,90,000	40,46,624	62,36,624
Mar	22,05,000	41,24,769	63,29,769
Apr	22,20,000	42,04,079	64,24,079
May	22,35,000	42,84,567	65,19,567
Jun	22,50,000	43,66,250	66,16,250
Jul	22,65,000	44,49,140	67,14,140
Aug	22,80,000	45,33,254	68,13,254
Sep	22,95,000	46,18,608	69,13,608
Oct	23,10,000	47,05,215	70,15,215
Nov	23,25,000	47,93,093	71,18,093
Dec	23,40,000	48,82,257	72,22,257

2039

Period	Invested amount	Expected Returns	Total value
Jan	23,55,000	49,72,722	73,27,722
Feb	23,70,000	50,64,506	74,34,506
Mar	23,85,000	51,57,625	75,42,625
Apr	24,00,000	52,52,095	76,52,095
May	24,15,000	53,47,934	77,62,934
Jun	24,30,000	54,45,158	78,75,158
Jul	24,45,000	55,43,785	79,88,785
Aug	24,60,000	56,43,833	81,03,833
Sep	24,75,000	57,45,318	82,20,318
Oct	24,90,000	58,48,259	83,38,259
Nov	25,05,000	59,52,675	84,57,675
Dec	25,20,000	60,58,584	85,78,584

2040

Period	Invested amount	Expected Returns	Total value
Jan	25,35,000	61,66,003	87,01,003
Feb	25,50,000	62,74,953	88,24,953
Mar	25,65,000	63,85,453	89,50,453
Apr	25,80,000	64,97,521	90,77,521
May	25,95,000	66,11,178	92,06,178
Jun	26,10,000	67,26,442	93,36,442
Jul	26,25,000	68,43,335	94,68,335
Aug	26,40,000	69,61,877	96,01,877
Sep	26,55,000	70,82,088	97,37,088
Oct	26,70,000	72,03,989	98,73,989
Nov	26,85,000	73,27,601	1,00,12,601
Dec	27,00,000	74,52,946	1,01,52,946

SIP Calculator is an online tool that estimates the future value of your mutual fund investments. Enter your monthly SIP amount, expected annual return, and investment tenure to calculate your projected corpus, total investment, and wealth gained instantly.

SIP Calculator Formula

An SIP Investment Calculator uses the following formula for getting the estimated returns:

FV = P × [({(1 + r)^n – 1} / r) × (1 + r)]

Where,

FV = Future Value.
P = Monthly SIP amount.
r = Expected Rate of Return.
n = Duration (Years / Months / Days).

How to Use the SIP Calculator?

The SIP Calculator is very simple to use. It is a three-step process. You can use it by following the steps mentioned below.

Step 1: Enter your Monthly SIP amount
Step 2: Enter your SIP tenure
Step 3: Enter the expected Rate of Return

Hence, after entering the details, the SIP calculator will automatically show the invested value, the estimated returns on the investment, and the total investment value.

Let’s understand how to use the SIP calculator by using some real-time examples.

Example:

Monthly SIP: ₹8,000
Duration: 7 years
Return: 14%

The calculator will instantly show,

Total Investment: ₹6,72,000
Estimated Returns: ₹4,72,202
Total Value: ₹11,44,202

SIP Returns Quick Comparison

The table below shows how different SIP amounts can grow over time at a fixed return rate.

Monthly SIP	Duration	Expected Return	Future Value
₹5,000	10 Years	12%	₹11,61,695.38
₹10,000	15 Years	12%	₹50,45,760
₹15,000	20 Years	12%	₹1,49,87,218.79
₹20,000	25 Years	12%	₹3,79,52,701.85

How Can a SIP Calculator Help You?

A SIP calculator helps users calculate mutual fund investment growth over time with multiple investment amounts, durations, and expected return rates to identify the expected future value of their investment in different cases. Here are the key benefits that a SIP calculator provides to users.

Future Value: SIP calculator accurately predicts how your SIP grows based on amount, tenure, and returns with monthly and yearly projections.
Plan Your Goals: Users can able to plan perfectly how much to invest each month to achieve goals like buying a house or a car.
Understand Compounding: It clearly projects the growth of investment, where users can understand how compounding helps to grow the wealth over the period.
Investment Comparison: Users can compare different amounts, duration, or return to understand the future investment value in different circumstances.
Save Time: Get instant and accurate results without manual calculations
Make Better Decisions: Gain clarity to invest confidently and stay consistent by knowing how your investment is growing over time.

SIP vs Lumpsum vs RD Key Differences

Feature	SIP	Lump Sum	RD
Investment style	Fixed amount invested regularly	One-time large investment	Fixed amount deposited monthly
Market exposure	Yes	Yes	No
Risk level	Moderate	High (timing risk)	Very low
Returns	Market-linked	Market-linked	Fixed
Best for	Regular investors, beginners	Investors with surplus funds	Conservative savers
Flexibility	High (start/stop anytime)	Low (timing matters)	Medium (fixed tenure)
Minimum investment	₹100/month	₹1,000+ (varies)	₹100/month
Ideal duration	Long-term	Medium to long-term	Short to medium-term
Taxation	Capital gains tax	Capital gains tax	Interest taxed as per slab
Goal	Wealth creation	Wealth creation	Safe savings

The Power of Compounding in SIP

Compounding is the process by which your investment earns returns, and those returns generate additional earnings over time. In a SIP, your regular contributions benefit from compounding as the returns are reinvested, leading to exponential growth.

Example: Investing ₹5,000 monthly at 12% annual return for 10 years doesn’t just grow linearly; it multiplies as both your contributions and accumulated returns earn further returns. This makes SIPs a powerful tool for long-term wealth creation.

Is SIP Better Than a Lump Sum?

SIP is generally better for most investors because:

Reduces Market Timing Risk: You invest regularly instead of all at once, so your investment is not affected by a single market high or low point
Rupee Cost Averaging Method: Whenever an investor buys more units when prices are low or high, the rupee cost averaging method balances the overall investment cost.
Builds Consistency: SIP provides regular monthly inflow to the investments, which creates a consistent habit of saving and investing over time to create long-term wealth.
Suitable for Salaried Individuals: SIPs allow small, periodic investments, making it easier to invest from a monthly income without needing a large upfront amount.

Frequently Asked Questions

What is the ideal SIP amount for beginners?

Can I run multiple SIPs at the same time?

How does SIP behave during a market crash?

What is SIP frequency, and which option is best?

Can SIP be used for short-term goals?

How accurate is a SIP calculator?

Can SIP returns be guaranteed?

What is the ideal SIP tenure?

Is SIP taxable?

Can I stop SIP anytime?

What happens if I miss a SIP installment?

What return rate should I use in a SIP calculator?

Is SIP safe?

About the Author

REPAKA PAVAN ADITYA

Stocks and Mutual Funds Research Analyst

I manifest my zeal in financial qualitative & quantitative research and have been instrumental in creating a robust process for the evaluation and monitoring of mutual funds. I’m responsible for Equity and Mutual Funds Research while creating instrumental mathematical models for portfolio construction after evaluating funds, and I play an integral role in analyzing changes in mutual funds, micro, and macro-economic indicators, and equity market events and trends. My views on asset classes which are integral in creating an investment strategy for any profile. Read more

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