What formula does a SIP calculator use?

The future value of a level-payment SIP (annuity-due option included) is FV = PMT * ((1+i)^N - 1)/i * (1+i)^δ where i is the per-period rate, N the total number of contributions, and δ = 1 for beginning-of-period (annuity due) or 0 for end-of-period.

How is the per-period rate determined from an annual return?

The per-period rate is i = (1+r_annual)^(1/m) - 1, where m is the number of contribution periods per year (e.g., 12 for monthly).

What is a Step-Up SIP?

A Step-Up SIP increases the contribution by a fixed percentage once per year. This tool simulates that increase across periods to compute the compounded corpus.

How do you adjust for inflation (real value)?

We apply the Fisher relation: 1 + r_real = (1 + r_nominal) / (1 + inflation), and convert the nominal future value to purchasing-power terms by dividing by (1+inflation)^years.

Can I solve for the SIP needed to reach a target amount?

Yes. Toggle Goal-Seek, enter your target future value, and the tool solves numerically for the required base SIP given your timing, step-up, years, and return.

No. Results are pre-tax and exclude fund expenses; consult your jurisdiction’s rules to estimate after-tax outcomes.

Systematic Investment Plan Calculator

Data Source and Methodology

Primary reference (regulatory): Securities and Exchange Board of India (SEBI) — Official SIP calculator. We align our mechanics (periodic contributions and future value projection) with regulator-grade practice. All calculations strictly follow the formulas and data provided by this source.
Formula parity (industry): Widely used SIP/annuity future-value identity as documented by leading platforms (Zerodha, SBI Securities). Step-Up SIP is computed by simulating the annual increase to contributions.
Real (inflation-adjusted) results: Fisher relation $1+r_{\text{real}}=\frac{1+r_{\text{nominal}}}{1+\pi}$ — standard in finance texts and practitioner sources (e.g., Investopedia). We present both nominal and purchasing-power results.

The Formula Explained

Per-period rate from annual CAGR $r$ and frequency $m$:

\[ i = (1+r)^{1/m} - 1 \]

Future value of level SIP ($\delta=1$ for beginning-of-period):

\[ FV_{\text{SIP}} = \mathrm{PMT}\cdot \frac{(1+i)^{N}-1}{i}\cdot (1+i)^{\delta}, \quad \delta=\begin{cases}0 & \text{End}\\ 1 & \text{Beginning}\end{cases} \]

Lump sum compounded for $N$ periods:

\[ FV_{\text{lump}} = P_0\,(1+i)^{N} \]

Total future value:

\[ FV = FV_{\text{SIP}} + FV_{\text{lump}} \]

Inflation-adjusted (real) future value using annual inflation $\pi$ and years $T$:

\[ FV_{\text{real}} = \frac{FV}{(1+\pi)^{T}} \]

Step-Up SIP: when the SIP increases by $g$ once each year, we simulate period by period: \[ FV = \sum_{t=1}^{N} \mathrm{PMT}_t\,(1+i)^{N-t}, \quad \mathrm{PMT}_t = \mathrm{PMT}_0\,(1+g)^{\lfloor (t-1)/m \rfloor} \] where $m$ is periods per year.

Glossary of Variables

Symbol / Field	Meaning
$\mathrm{PMT}$ (Base SIP)	Recurring contribution per period (e.g., per month).
$m$ (Frequency)	Number of contributions per year (12 monthly, 4 quarterly, 52 weekly, 26 fortnightly).
$r$ (Annual return)	Expected annual compound return (CAGR), as a decimal.
$i$ (Per-period rate)	$i=(1+r)^{1/m}-1$.
$T$ (Years)	Investment horizon in years; total periods $N=\lfloor m\cdot T \rfloor$.
$\delta$ (Timing)	1 for beginning-of-period (annuity-due), 0 for end-of-period.
$g$ (Step-Up)	Annual percentage increase to the base SIP.
$\pi$ (Inflation)	Annual inflation rate used to compute purchasing-power results.
$P_0$ (Lump sum)	Optional initial amount compounded over $N$ periods.

How It Works: A Step-by-Step Example

Inputs: Base SIP = \$500 monthly; $r=12\%$ annually; $T=10$ years; timing = End; step-up $g=5\%$ annually; inflation $\pi=4\%$; lump sum $P_0=0$.

Per-period rate $i=(1+0.12)^{1/12}-1\approx 0.009488$ (0.9488% per month).
Total periods $N=120$.
Without step-up and lump sum: $\;FV_{\text{SIP}}=500\cdot\frac{(1+i)^{120}-1}{i}\approx \$116{,}946$ (end timing).
With 5% annual step-up, simulate monthly: increase PMT at months 13, 25, …; compounded corpus rises (calculator performs the exact sum).
Real (inflation-adjusted) value: $FV_{\text{real}}=\frac{FV}{(1+0.04)^{10}} \approx FV/1.4802$.

Frequently Asked Questions (FAQ)

Does a higher frequency always increase the corpus?

For a given annual return, higher contribution frequency slightly increases compounding cadence, but the dominant factors remain total contributed amount, rate, timing, and horizon.

What does “Beginning (annuity-due)” change?

Each contribution compounds for one extra period, typically yielding a higher corpus than end-of-period.

How accurate is the projection?

It’s a mathematical projection based on constant return and inflation assumptions. Actual market returns vary.

Can I include an initial lump sum?

Yes. We compound the lump sum for $N$ periods and add it to the SIP future value.

What if I need exactly \$X after Y years?

Use Goal-Seek. Enter the target corpus and the tool solves for the required base SIP under your other settings.

Authorship: Tool developed by Ugo Candido. Content reviewed by Finance Content Editor. Last accuracy review: .

Symbol / Field	Meaning
\(\mathrm{PMT}\) (Base SIP)	Recurring contribution per period (e.g., per month).
\(m\) (Frequency)	Number of contributions per year (12 monthly, 4 quarterly, 52 weekly, 26 fortnightly).
\(r\) (Annual return)	Expected annual compound return (CAGR), as a decimal.
\(i\) (Per-period rate)	\(i=(1+r)^{1/m}-1\).
\(T\) (Years)	Investment horizon in years; total periods \(N=\lfloor m\cdot T \rfloor\).
\(\delta\) (Timing)	1 for beginning-of-period (annuity-due), 0 for end-of-period.
\(g\) (Step-Up)	Annual percentage increase to the base SIP.
\(\pi\) (Inflation)	Annual inflation rate used to compute purchasing-power results.
\(P_0\) (Lump sum)	Optional initial amount compounded over \(N\) periods.