A SIP (systematic investment plan) puts a fixed amount into a mutual fund every month. Because each instalment keeps growing for the months that follow, a modest SIP held for long becomes large - the growth, not the saving, does most of the work after about ten years.
Raising the SIP a little every year - a step-up, say with your increment - changes the result more than most people expect. Try 10% with the step-up box.
How it is worked out
Value = P × [(1 + i)n − 1] / i × (1 + i), where P is the monthly SIP, i the yearly return ÷ 12 and n the number of months.
Questions
Is the return guaranteed?
No. Equity funds move up and down; the rate you type is an average assumption. Use 10-12% for diversified equity over 10+ years if you want a common planning figure, and a lower rate for shorter periods.
Why does 12% show more than 12% a year?
The yearly return is applied monthly (12% ÷ 12 = 1% a month), which is how Indian SIP calculators work. Compounded, that is about 12.68% a year.
Is tax deducted?
No. Gains on equity funds held over a year are taxed as long-term capital gains when you redeem; this calculator shows the value before tax.