Consider a monthly SIP of Rs 10,000 into an equity mutual fund for 20 years, assuming a 12 percent annual return and no step-up. The monthly rate is 12 percent divided by 12, which is 1 percent, applied over 240 months. The calculator grows the running balance each month and adds the fresh Rs 10,000, so early instalments compound for the full 20 years while later ones compound for less. Over the period you invest 240 times Rs 10,000, which is Rs 24,00,000 of your own money. The projected corpus at the end is about Rs 98,92,554, meaning the wealth gained over and above what you invested is roughly Rs 74,92,554. That is a wealth multiplier of about 4.12 times the invested amount, driven almost entirely by compounding rather than by larger contributions.
Step
Value
Monthly SIP
Rs 10,000
Tenure
20 years (240 months)
Expected CAGR
12 percent
Total invested
Rs 24,00,000
Wealth gained
Rs 74,92,554
Corpus at end
Rs 98,92,554
How it is calculated
A SIP is the future value of a regular monthly investment compounded at the expected return. The calculator loops through every month, applying the monthly rate to the existing balance and then adding the new instalment, which mirrors how fund units accumulate. With the step-up option, the monthly amount is raised by the chosen percentage at the start of each year, modelling rising contributions as your income grows. The assumed return is a long-run average, not a guarantee, since equity returns vary year to year. Historically broad Indian equity indices have delivered around 12 percent over multi-decade horizons, so 10 to 12 percent is a reasonable planning figure, with mid and small-cap funds historically higher but more volatile. Remember that equity gains attract capital gains tax on redemption, which this tool does not deduct.
Frequently asked questions
What return should I assume?
Historical Nifty 50 ~12-14% pre-tax CAGR over 20+ year horizons. For conservative planning use 10-12%. Mid-cap and small-cap higher (15%+ historical) but more volatile.
Are SIP gains taxable in India?
Yes. For equity mutual funds, gains on units held more than 12 months are taxed as Long Term Capital Gains (LTCG) at 12.5% on amounts above Rs 1.25 lakh per year under the Finance Act 2024. Gains on units held 12 months or less are Short Term Capital Gains (STCG) taxed at 20%. Debt fund gains are added to income and taxed at slab rates regardless of holding period.
What is a step-up SIP?
A step-up SIP increases your monthly contribution by a fixed percentage each year. For example, starting at Rs 10,000 per month with a 10% annual step-up means you invest Rs 11,000 in year two, Rs 12,100 in year three, and so on. This mirrors income growth and significantly boosts the final corpus compared to a flat SIP of the same initial amount.
Does this calculator account for expense ratio?
No. The expected return you enter should ideally be net of the fund expense ratio. A typical equity mutual fund in India charges 0.5% to 1.5% per year. If you expect gross returns of 13% and the fund charges 1%, enter 12% as the CAGR. Direct plans have lower expense ratios than regular plans, which is one reason direct plans tend to deliver higher net returns over long periods.