SIP Calculator: SIP, Step-up SIP and Lumpsum

Three things decide what an investment becomes: how much goes in, how long it stays, and what it earns while it is there. This calculator takes all three and shows the result as a projection rather than a single number — the amount you contributed, the growth on top of it, and the point in the timeline where the growth starts to outweigh the contributions.

It handles the three shapes an Indian investor usually needs. A lump sum, where one amount is invested and left. A monthly investment or SIP, where a fixed amount goes in every month. And a step-up SIP, where that monthly amount rises each year — usually because income has. You can combine them: an initial amount plus a monthly one is a common enough pattern that the calculator treats it as ordinary rather than special.

The output separates two figures people routinely conflate. Absolute return is the growth as a share of what you invested; it takes no account of how long the money was invested, so 60% over three years and 60% over thirty are the same number. Annualised return is the rate per year, and for anything other than a lump sum it cannot be found by dividing — which is the subject of the methodology below.

Money compounds monthly. The monthly rate is derived from the annual rate you enter as:

i = (1 + r)1/12 − 1

This matters more than it looks. Many calculators use i = r ÷ 12, which treats your figure as a nominal rate compounded monthly and quietly returns more than advertised — 12% becomes 12.68% effective over a year. Deriving the monthly rate the way above means the number you type is the number you get, and a lump sum grows to exactly P(1 + r)n.

A lump sum over n years:

FV = P × (1 + r)n

A monthly investment of A made at the start of each month, over N months — an annuity due:

FV = A × (1 + i) × [((1 + i)N − 1) ÷ i]

With a step-up the monthly amount is not constant, so there is no single closed form. The calculator steps through month by month, raising the contribution by the step-up percentage on each anniversary.

On the annualised figure. For a lump sum this is the CAGR, and it comes back to the rate you assumed. For anything with monthly contributions, CAGR is not available: money invested in the final year has not been invested for the full term, so there is no single holding period to annualise. Computing (value ÷ invested)1/n − 1 — which is what many pages label CAGR for a SIP — badly understates the return, because it pretends every rupee was there from the start. This calculator instead solves for the money-weighted return (XIRR) across the actual cash flows, which accounts for when each contribution was made.

Take ₹10,000 a month for 10 years at an assumed 12% a year, with no step-up and no initial amount.

• You contribute ₹10,000 × 120 months = ₹12,00,000.
• The monthly rate is (1.12)1/12 − 1 ≈ 0.9489%.
• The projection reaches roughly ₹22.4 lakh, so growth is about ₹10.4 lakh.
• Absolute return is about 87% — the growth divided by what you put in.
• The annualised return is 12%, the rate assumed, because every rupee compounded at it. Note that the naive calculation, ₹22.4 lakh ÷ ₹12 lakh to the power one-tenth, gives about 6.4% — roughly half the real figure, and a good illustration of why that formula should not be used for a SIP.

Add a 10% annual step-up to the same inputs and the contributions rise to ₹23,579 a month by year ten. Both the invested amount and the final value rise; the annualised return does not, because the rate assumed has not changed.

The figures are before tax, before costs and in nominal rupees. Gains on equity investments attract capital gains tax when you redeem; a fund's expense ratio reduces returns every year; and inflation reduces what the final sum will buy. A steady annual return is also a modelling convenience — real markets do not deliver the same figure every year, and the order in which good and bad years arrive matters more than most projections admit. Nothing here is a recommendation to buy or hold anything.