SIP Calculator

A Systematic Investment Plan (SIP) is an investment strategy where you invest a fixed amount regularly (usually monthly) in mutual funds or other investment vehicles. SIPs allow you to benefit from rupee-cost averaging (buying more units when prices are low and fewer when prices are high) and the power of compounding over time.

In a SIP, you invest a fixed amount regularly over time, while a lump sum investment involves investing a large amount all at once. SIPs help reduce the impact of market volatility through rupee-cost averaging and are suitable for regular income earners. Lump sum investments might be better when you have a large amount available and believe the market is at a low point.

The expected return rate depends on the type of mutual fund or investment vehicle you choose. As a general guideline, equity funds might deliver 12-15% returns over the long term, balanced funds around 10-12%, and debt funds around 6-8%. However, these are not guaranteed and can vary based on market conditions. It's advisable to use conservative estimates for planning purposes.

Yes, you can increase your SIP amount over time through a step-up or top-up SIP. This allows you to increase your investment amount periodically (e.g., annually) to align with your increasing income. A step-up SIP can significantly boost your returns over the long term. Our calculator currently doesn't account for step-up SIPs, but you can recalculate with the increased amount to get an estimate.

Our SIP calculator uses standard financial formulas and provides reasonably accurate projections based on the inputs you provide. However, actual investment returns can vary due to market fluctuations, changes in interest rates, and other factors. The calculator assumes a constant rate of return throughout the investment period, which may not reflect real-world conditions where returns fluctuate year to year.

The amount you should invest for your child's education depends on several factors: the type of education you're planning for (engineering, medical, MBA, foreign education), the current cost of that education, the number of years until your child needs the funds, and the expected education inflation rate (typically 10-12% annually). As a general guideline, for a child who is 3-5 years old, you might need to invest ₹15,000-₹50,000 monthly (depending on your education goal) for 15 years to build an adequate corpus. Use our SIP calculator with education inflation factored in to get a more accurate estimate.

A step-up SIP is a systematic investment plan where you increase your investment amount periodically (usually annually) by a fixed percentage or amount. For child education planning, step-up SIPs are particularly beneficial because they align with your likely income growth over time and help you accumulate a larger corpus. For example, if you start with a monthly SIP of ₹10,000 and increase it by 10% every year, after 15 years, you'll accumulate significantly more than a constant ₹10,000 monthly SIP. This approach makes it more manageable to reach large education corpus goals without committing to a high fixed amount from the beginning.

For child education planning through SIPs, the choice of mutual funds depends on your time horizon. If you have 10+ years until the funds are needed, equity-oriented funds like large-cap, multi-cap, or index funds can provide higher returns. For a 5-10 year horizon, balanced or hybrid funds that invest in both equity and debt might be more suitable. For less than 5 years, debt funds or conservative hybrid funds are recommended to preserve capital. Many fund houses also offer specific "child education" or "child gift" funds designed with education planning in mind, which typically follow a dynamic asset allocation strategy that becomes more conservative as your child approaches college age.

Education inflation, which typically ranges from 10-12% annually (much higher than general inflation), significantly impacts SIP planning for children's education. This high inflation rate means that education costs double approximately every 6-7 years. For example, if an engineering degree costs ₹15 lakhs today, it might cost ₹30 lakhs in 7 years and ₹60 lakhs in 14 years. When using a SIP calculator for education planning, you should first calculate the future cost of education by applying education inflation to current costs, and then determine the monthly SIP amount needed to reach that inflated target. Failing to account for education inflation can lead to a significant shortfall in your education corpus.

Our SIP calculator uses the following formula to calculate the future value of your investments:
FV = P × ((1 + r)ⁿ - 1) × (1 + r) ÷ r
Where:
FV = Future value of investment
P = Monthly SIP amount
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Total number of SIP installments (investment period in years × 12)
This formula accounts for the compounding effect on each SIP installment over the investment period.