What is the SIP formula?

FV = P × ((1 + r)^n − 1) / r × (1 + r), where P is the monthly contribution, r is the monthly return rate, and n is the number of months.

Is SIP better than lumpsum?

SIP averages entry prices across time and reduces timing risk, making it preferable for salaried investors. Lumpsum can outperform when markets are already low, but requires larger upfront capital and a longer horizon.

How much can I earn from a 10-year SIP?

A ₹10,000 monthly SIP at 12% p.a. for 10 years grows to about ₹23.2 lakh on ₹12 lakh invested — roughly ₹11.2 lakh in gains. Use the Calculyx AI SIP calculator to try your own numbers.

How to Calculate SIP Returns — Formula, Examples & Free Calculator

Published 2026-07-17 · 6 min read

A Systematic Investment Plan (SIP) is the most common way Indian and US investors buy mutual funds and ETFs: a fixed amount debited every month and invested at the day's NAV. Because each installment buys at a different price, the return isn't a simple compound-interest question — you need the SIP future value formula.

The SIP return formula

The future value of a monthly SIP, compounded monthly, is:

FV = P × ((1 + r)^n − 1) / r × (1 + r)

P — monthly contribution (₹5,000, $500, etc.)
r — monthly return rate = annual return / 12 / 100
n — number of monthly installments (years × 12)

Total invested is simply P × n, and estimated gains are FV − (P × n).

Worked example — India (₹)

You invest ₹10,000/month in a Nifty 50 index fund for 10 years, assuming a long-run return of 12% p.a.

P = ₹10,000, r = 12 / 12 / 100 = 0.01, n = 120
FV ≈ ₹10,000 × ((1.01^120 − 1) / 0.01) × 1.01 ≈ ₹23.23 lakh
Invested: ₹12,00,000 · Gains: ≈ ₹11.23 lakh

Worked example — US ($)

You invest $500/month in a broad S&P 500 ETF for 20 years, assuming a long-run return of 9% p.a.

P = $500, r = 9 / 12 / 100 = 0.0075, n = 240
FV ≈ $500 × ((1.0075^240 − 1) / 0.0075) × 1.0075 ≈ $336,000
Invested: $120,000 · Gains: ≈ $216,000

SIP vs Lumpsum — which is better?

SIP spreads investment across market cycles, averaging your entry price and removing the pressure to time the market. It suits salaried investors with steady monthly cash flow.

Lumpsum can outperform when markets are near a cyclical low or when you have a large one-time inflow (bonus, RSU vest, property sale) and a 7+ year horizon. Backtests on the Nifty 50 and S&P 500 show lumpsum wins in ~60% of rolling 15-year windows, but with much higher variance — the median investor is usually better served by SIP.

Common mistakes when calculating SIP returns

Using the annual rate as r instead of the monthly rate — inflates FV by ~6×.
Forgetting the trailing × (1 + r) — treating it as end-of-month instead of beginning-of-month contributions.
Assuming past NAV returns are guaranteed. Use 10–12% for equity SIPs in India, 8–9% for US equity SIPs, and stress-test with 6–7%.
Ignoring expense ratio and exit load — subtract 0.5–1.5% from the expected return before applying the formula.

Calculate your own SIP

The free Calculyx AI SIP calculator applies exactly this formula for both Indian and US markets, adds inflation adjustment, and lets you export the result to PDF. You can also compare SIP against lumpsum on the investing calculators hub.

Frequently asked questions

What is a good SIP return in India?

Historically, diversified equity mutual funds and Nifty 50 index funds have delivered 11–13% CAGR over 10-year windows. Use 12% as a base case and 8% as a conservative case.

Can I use this formula for step-up SIPs?

The formula above assumes a fixed monthly contribution. For step-up SIPs (where P increases annually), split the horizon into per-year blocks, compute FV for each, and roll each block forward at the same rate until the horizon ends.

Does the SIP formula work for US ETFs and 401(k) contributions?

Yes — the math is identical. Use the annualised return of the target ETF (e.g. VOO, VTI) and remember employer 401(k) matches count as additional P for the months they are credited.