SIP Returns Explained: How Your Monthly Investment Grows
A Systematic Investment Plan (SIP) invests a fixed amount in a mutual fund every month. Because each instalment earns returns on top of earlier returns, small amounts can grow large over long periods.
The SIP formula
Future value = P × [((1 + i)n − 1) ÷ i] × (1 + i), where P is the monthly amount, i is the expected monthly return (annual ÷ 12 ÷ 100) and n is the number of months.
Example
₹5,000 a month for 10 years at an assumed 12% a year: invested ₹6,00,000; estimated value ≈ ₹11.6 lakh. Over 20 years the same SIP grows to roughly ₹50 lakh, which shows why starting early matters.
Keep in mind
- Mutual fund returns are not guaranteed; 12% is an assumption, not a promise.
- Equity gains above the yearly exemption are taxed.
- Step-up SIPs (raising the amount each year) beat fixed SIPs over time.
For general information only. See our disclaimer.
Last updated: 2026-11-07