What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a disciplined approach to investing where you contribute a fixed amount at regular intervals — typically monthly — into a mutual fund or investment scheme. SIPs leverage the power of compounding and rupee-cost averaging, allowing investors to build wealth gradually without needing to time the market. Even small monthly contributions can grow into a substantial corpus over long periods.
SIP calculation formula
The future value of a SIP is calculated using the formula: FV = P × [(1 + r)n - 1] / r × (1 + r), where P is the monthly investment, r is the monthly rate of return (annual rate ÷ 12), and n is the total number of monthly instalments. This formula accounts for each instalment earning compound returns for its remaining duration.
Benefits of SIP investing
SIPs offer several advantages: they enforce financial discipline through regular contributions, reduce the impact of market volatility via rupee-cost averaging, allow you to start with small amounts, and harness the power of compounding over time. Our calculator helps you visualise how your monthly investments can grow, making it easier to plan your financial goals.