A Systematic Investment Plan (SIP) is the most boring way to get rich, which is also why it works. You commit a fixed amount per month, the fund debits it on a fixed date, and three things happen automatically: you average your cost across market cycles, you don't have to time the market, and the compounding takes care of the rest.
Open the SIP calculator, set it to ₹10,000 / 12% / 15 years, and you'll see what we're about to discuss.
The formula
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
where:
FV= future valueP= monthly investmentr= monthly rate (annual / 12 / 100)n= total number of months
CalcMaster uses an even simpler iterative version: it walks month by month, adds your contribution, and applies the monthly return. The number is identical and the iteration also produces the year-by-year schedule for the chart.
What ₹5,000/month becomes
Assuming a (historically reasonable) 12% annualized return:
| Time | Invested | Total value | Growth |
|---|---|---|---|
| 5 years | ₹3.0 L | ₹4.1 L | +37% |
| 10 years | ₹6.0 L | ₹11.5 L | +92% |
| 15 years | ₹9.0 L | ₹25.2 L | +180% |
| 20 years | ₹12.0 L | ₹50.0 L | +316% |
| 25 years | ₹15.0 L | ₹95.0 L | +533% |
That last row is the point. ₹5,000/month for 25 years can become ~₹1 crore. Not because you got lucky on a stock. Because you stayed consistent and the math compounded.
Three things to know before you set this up
1. Returns aren't promised
Equity SIPs average 11–14% over 15+ year windows in India historically. But any individual year can be -25% or +50%. The calculator assumes a smooth annualized return — reality is bumpy. Don't quit during the bumpy years.
2. Inflation eats half of nominal returns
A 12% nominal return at 6% inflation = ~6% real return. ₹1 crore in 25 years buys what ~₹23 lakh buys today. Plan in real terms, not nominal terms, if you can. CalcMaster gives nominal; mentally apply 50% haircut for purchasing power.
3. Step-up SIP beats flat SIP for almost everyone
If you can increase your monthly contribution by 10% every year (e.g., when you get a raise), the corpus grows substantially faster — often 60–80% larger over a 20-year horizon. The basic SIP calculator assumes flat amount; a future release will include a step-up toggle.
Where SIPs fit (and where they don't)
Use SIP for:
- Long-term goals (retirement, kid's college, house down-payment in 7+ years)
- Equity mutual funds, hybrid funds, index funds
- Anything you don't want to think about monthly
Don't SIP for:
- Short-term parking (use FD/liquid funds)
- Sector funds you're trying to time (defeats the point)
- An emergency fund (use a savings account)
Now run the math
Set up your own numbers in the SIP calculator. And if you want to go deeper, we have six dedicated articles covering SIP vs lumpsum, step-up SIPs, tax implications, common mistakes, goal-based investing, and SIP vs prepaying a loan.
