What is a SIP and how does it work?

A Systematic Investment Plan (SIP) auto-invests a fixed amount into a mutual fund every month. Each SIP buys units at the prevailing NAV — so when prices fall you buy more units, when they rise you buy fewer. This 'rupee-cost averaging' smooths volatility. Most equity SIPs start as low as ₹500 / £25 / $25 per month.

How is the SIP future value calculated?

For a constant monthly SIP of P at monthly rate r over n months, future value FV = P × [((1+r)^n − 1) / r] × (1+r). For step-up SIP, the formula is applied year-by-year with the contribution increased annually. Lump sum amounts compound separately at FV = L × (1+r)^n.

What return rate should I assume?

Indian large-cap equity mutual funds have averaged 11–13% over 15-year periods. Global equity index funds (S&P 500, MSCI World) average 8–10% in USD/GBP terms. For planning use 10–12% for equity SIPs and 7–8% for hybrid funds. Lower assumptions (8%) build margin of safety.

What is a step-up SIP?

A step-up (or 'top-up') SIP automatically increases your monthly contribution by a fixed % each year — usually matching your salary increment. A 10% annual step-up on a ₹10,000 SIP grows to ₹17,716 by year 7 and meaningfully boosts your final corpus without conscious effort.

Tax depends on jurisdiction. In India, equity mutual fund gains held over 12 months are LTCG taxed at 12.5% above ₹1.25 lakh exemption (FY25). UK gains are taxed under CGT (£3,000 allowance). US mutual fund gains held over 12 months get long-term capital gains rates (0/15/20%). This calculator shows pre-tax future value.

📈 SIP / Investeringsforeningslommeregner

Project the future value of your mutual fund SIP. Models monthly contributions, optional lump sum and annual step-up. Valuta-agnostic.

Valuta

Investment Period (years)

Månedlig SIP

Engangsbeløb (valgfrit)

Expected Årligt Afkast (%)

Årlig stigning (%)0 = konstant SIP. 10% almindeligt for lønforhøjelser.

⚠️ Illustrative only. Past performance ≠ future returns. Mutual funds carry market risk. Read scheme documents carefully. Pre-tax projection — capital gains tax treatment varies by jurisdiction. Not investment advice.

How a SIP Builds Long-Term Wealth

A Systematic Investment Plan is a disciplined way to invest a fixed amount in mutual funds every month, no matter what the market is doing. Three quiet forces do the heavy lifting:

Rupee/dollar-cost averaging — when NAVs fall you buy more units; when they rise you buy fewer. Over time your average cost per unit stays below the highs.
Compounding — enhver gevinst geninvesteres og tjener sin egen gevinst. De sidste 5 år af en 20-årig SIP bidrager normalt mere end de første 10 tilsammen.
Behavioural discipline — automation removes the temptation to time the market. Most investors who try to time the market underperform a steady SIP.

Formlen

For et konstant månedligt SIP på P, månedlig sats r, over n måneder:

FV = P × [((1+r)ⁿ − 1) / r] × (1+r)

Where r = annual return / 12. A lump sum compounds separately as L × (1+r)ⁿ. A step-up SIP applies the formula year-by-year with the contribution incremented each January.

SIP vs. engangsbeløb

Hvis du har et engangsbeløb og en 10+ årig horisont, slår et lump sum invested today matematisk normalt set en SIP — fordi pengene har mere tid til at vokse. SIP'er vinder på volatility management og på den (meget almindelige) realitet, at de fleste opsparere ikke har et engangsbeløb at indsætte. Mange rådgivere foreslår at dele: investér ⅓ som engangsbeløb, resten via 6–12 måneds STP i samme fond.

Choosing the Step-Up

An annual step-up matched to your salary growth (typically 8–10%) compounds spectacularly. A constant ₹10,000 SIP at 12% over 20 years grows to about ₹1 crore. Add a 10% annual step-up and you cross ₹1.7 crore — for the same proportional effort.

Realistiske afkastantagelser

Indian large-cap funds: 11–13% historisk (15-årig CAGR)
Indian small/mid-cap funds: 13–16% with much higher volatility
Global equity index (S&P 500 / MSCI World): 8–10% USD
Hybrid / balanced funds: 8–10%
Debt funds: 6–7%

Brug 10% som et fornuftigt standardtal til fremskrivninger. Planlæg for 8%, hvis du ønsker en sikkerhedsmargen; antag kun 12%, hvis du fuldt ud accepterer aktievolatilitet.

⚠️

Vigtig bemærkning: Investeringsforeningsinvesteringer er underlagt markedsrisici. Læs alle ordningsrelaterede dokumenter omhyggeligt inden investering. Tidligere resultater er ingen garanti for fremtidige afkast. Konsultér en SEBI-registreret investeringsrådgiver (Indien) eller FCA-autoriseret IFA (UK) inden større kapitalforpligtelser.

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