The SIP future-value formula
If you invest an amount M at the end of every month for n months at a monthly rate i, the future value is:
FV = M × [(1 + i)^n − 1] ÷ i
For deposits made at the start of each month, multiply the result by (1 + i). A lumpsum is simpler: FV = P × (1 + i)^n.
A worked SIP example
Invest 10,000 a month for 10 years (120 months). To keep the example simple, assume a steady return of 1% per month. The future value is 2,300,386.89 for end-of-month deposits (2,323,390.76 if each deposit is made at the start of the month). You contributed 1,200,000, so the growth is 1,100,386.89. The SIP Calculator on this site converts a yearly return into an effective monthly rate, so its figures will differ slightly from this simplified example.
Comparing SIP with a lumpsum
If you had the full 1,200,000 available on day one and invested it all at the same steady 1% per month, it would grow to 3,960,464.27 after 10 years. That is higher than the SIP result, but only because all the money worked for the full ten years. The comparison is unfair unless the cash is really available at the start. For most people the real choice is between investing monthly from income or waiting until a lump sum builds up elsewhere.
What a constant return hides
Real investments do not return a fixed amount every month. A SIP buys at many different prices, which reduces the risk of putting everything in just before a fall, an idea often called rupee-cost averaging. It does not guarantee a better result than a lumpsum, and in a steadily rising market a lumpsum invested early usually does better. Use calculators to understand the effect of time and contribution size, not to predict returns.
Raising the SIP every year
A step-up SIP increases the monthly amount each year. Starting at 10,000 and raising it by 10% every year under the same assumptions invests 1,912,490.95 in total and reaches about 3,374,326.26 after 10 years. Increasing contributions as your income grows often matters more than chasing a slightly higher return. Try it with the Step Up SIP Calculator.
Choosing sensibly
Match the method to your cash flow, keep your time horizon and risk tolerance in mind, and remember that fees, taxes and fund performance affect real outcomes. This guide is educational and is not investment advice; consider speaking to a licensed adviser for decisions about your money.
Try it with your own numbers
Run your own scenarios with the SIP Calculator, Lumpsum Calculator and SWP Calculator.
Frequently asked questions
Is SIP better than lumpsum?
Neither is always better. A lumpsum invested early benefits from more time in the market, while a SIP spreads purchases over time and fits monthly income.
Do SIP calculators predict returns?
No. They apply a constant assumed return to show the arithmetic. Real returns vary and are not guaranteed.
What is a step-up SIP?
A SIP whose monthly amount increases by a set percentage each year, usually to match rising income.
Written and maintained by the CalculatorsOnline Editorial Team. Last updated . Educational content only; no professional credentials are claimed. Read our editorial policy.