Why does this calculator use the Annuity Due convention?

In Indian mutual funds, your SIP installment is deducted and units are allotted at the beginning of each installment cycle. Consequently, your money begins generating returns immediately during that first month. The Annuity Due formula [FV = P × (((1+r)^n - 1) / r) × (1+r)] reflects this operational reality.

Is 12% an appropriate expected return for Indian equity mutual funds?

Historically, broad Indian market indices like the Nifty 50 and BSE Sensex have delivered long-term multi-cycle returns in the 12% to 14% range. A 12% illustrative annual return assumption is commonly used as a planning baseline for long-term equity mutual fund modeling. Mutual fund returns are market-linked, non-linear, and neither guaranteed nor fixed by any fund house or regulatory body.

How are mutual fund SIP gains taxed in India?

For equity mutual funds (under Budget 2024 tax rules), Long-Term Capital Gains (LTCG) on units held for more than 12 months are taxed at 12.5% on gains exceeding ₹1.25 Lakh per financial year. Short-Term Capital Gains (STCG) on units redeemed within 12 months are taxed at 20%. Note: Each monthly SIP installment has its own separate 1-year holding clock.

Mutual FundsVerified: 2024-10-01

SIP Calculator

Forecast your wealth accumulation through systematic mutual fund investments. Uses monthly compounding and transparent annuity-due conventions formatted natively in Lakhs and Crores.

Direct Answer:Investing ₹5,000 per month for 10 Years (120 Months) at an expected return of 12% p.a. generates an estimated maturity value of ₹11,61,695. Over this period, you will invest a total of ₹6,00,000 and accumulate ₹5,61,695 in estimated wealth gains (1.94x growth).

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Adjust Parameters

Monthly SIP Installment₹5 Thousand

₹

₹500₹10,00,000

Amount automatically debited from your bank account each month.

Expected Return Rate (% p.a.)12% Illustrative Annual Return Assumption

1%30%

Illustrative annual return (historical Indian equity CAGR: 12-14%).

Investment Time Horizon

Years

1 Y40 Y

Longer timeframes dramatically increase compound wealth accumulation.

Estimated Maturity Value

₹11,61,695

Corpus after 10 Years (120 Months) at 12% p.a.

Gains represent 48.4% of your final portfolio value.

Invested Capital

₹6,00,000

Wealth Gained

₹5,61,695

1.94x growth multiple

Invested Capital vs Estimated Returns

Total: ₹11,61,695

Invested Capital vs Estimated Returns data table
Category	Amount	Percentage
Total Invested Capital	₹6,00,000	51.6%
Estimated Wealth Gained	₹5,61,695	48.4%

Return Rate Sensitivity (±2% to ±4%)

Mutual funds are market-linked instruments. Review portfolio growth across conservative and optimistic equity scenarios.

SIP Return Sensitivity Table
Return Rate	Total Invested	Estimated Gains	Maturity Corpus	Difference
8%	₹6,00,000	₹3,20,828	₹9,20,828	-₹2,40,867
10%	₹6,00,000	₹4,32,760	₹10,32,760	-₹1,28,935
12% (Current)	₹6,00,000	₹5,61,695	₹11,61,695	-
14%	₹6,00,000	₹7,10,457	₹13,10,457	+₹1,48,762
16%	₹6,00,000	₹8,82,358	₹14,82,358	+₹3,20,663

Long-Term Compounding Horizons

Notice how wealth generation accelerates exponentially in years 15 through 30 as returns generate compounding returns.

SIP Tenure Comparison Table
Horizon	Total Invested	Wealth Gained	Maturity Corpus	Growth Multiple
5 Years	₹3,00,000	₹1,12,432	₹4,12,432	1.37x
10 Years (Current)	₹6,00,000	₹5,61,695	₹11,61,695	1.94x
15 Years	₹9,00,000	₹16,22,880	₹25,22,880	2.8x
20 Years	₹12,00,000	₹37,95,740	₹49,95,740	4.16x
25 Years	₹15,00,000	₹79,88,175	₹94,88,175	6.33x
30 Years	₹18,00,000	₹1,58,49,569	₹1,76,49,569	9.81x

Year-by-Year Wealth Progression

Yearly SIP Progression Table
Year	Cumulative Invested	Yearly Interest	Total Wealth Gained	Portfolio Balance
Year 1	₹60,000	₹4,047	₹4,047	₹64,047
Year 2	₹1,20,000	₹12,169	₹16,216	₹1,36,216
Year 3	₹1,80,000	₹21,322	₹37,538	₹2,17,538
Year 4	₹2,40,000	₹31,636	₹69,174	₹3,09,174
Year 5	₹3,00,000	₹43,258	₹1,12,432	₹4,12,432
Year 6	₹3,60,000	₹56,353	₹1,68,785	₹5,28,785
Year 7	₹4,20,000	₹71,110	₹2,39,895	₹6,59,895
Year 8	₹4,80,000	₹87,738	₹3,27,633	₹8,07,633
Year 9	₹5,40,000	₹1,06,475	₹4,34,108	₹9,74,108
Year 10	₹6,00,000	₹1,27,587	₹5,61,695	₹11,61,695

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How SIP Returns Are Calculated (Annuity Due Convention)

Transparent mathematical formulas and assumptions used across our financial engines.

Mathematical Formula

FV = P × [((1 + r)^n - 1) / r] × (1 + r)

Variables & Legend

Monthly Installment

₹5,000 credited each cycle

Expected Monthly Rate

Annual return (12%) ÷ 12 ÷ 100

Number of Monthly Deposits

120 total installments

Step-by-Step Calculation

Step 1: Expected Monthly Rate of Return (r): r = (12% / 12) / 100 = 0.010000
The expected annual compound rate is divided across 12 monthly compounding periods.
Step 2: Number of Monthly Installments (n): n = 10 Years × 12 = 120 Installments
Total systematic contributions deposited over the complete investment horizon.
Step 3: Annuity-Due Future Value Calculation: FV = P × [((1 + r)^n - 1) / r] × (1 + r) = ₹11,61,695
Because mutual fund SIPs deduct funds at the beginning of each installment cycle, each monthly payment earns interest for that initial month (Annuity Due factor).

Conventions & Assumptions

Compounded monthly with payments credited at the start of each month (Annuity Due), matching standard mutual fund processing in India.
Equity mutual funds do not offer guaranteed returns; calculations reflect mathematical compound projections based on the constant return rate entered.
Expense ratios and applicable capital gains taxes (LTCG / STCG) are excluded from basic compound projections.

Frequently Asked Questions

A Systematic Investment Plan (SIP) is an investment vehicle provided by mutual funds in India that allows you to invest a fixed amount of money at regular monthly intervals into an equity, debt, or hybrid fund scheme.

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