SIP example
₹1,000 SIP for 20 years
Invested every month at a 12% average annual return, ₹1,000 for 20 years grows to about ₹9.99 lakh. You put in ₹2.4 lakh; the other ₹7.59 lakh is returns.
Result
₹9.99 L
Maturity value after 20 years
- Total invested
- ₹2.40 L
- Returns earned
- ₹7.59 L
- In today's money (6% inflation)
- ₹3.12 L
- With a 10% yearly step-up
- ₹19.89 L
Your money grows 4.2 times. From year 11, the returns are larger than everything you have put in.
Starting five years later and stopping at the same time leaves about ₹5.05 lakh, ₹4.95 lakh less.
₹1,000 a month for 20 years at different returns
| Annual return | Invested | Returns | Maturity value |
|---|---|---|---|
| 8% | ₹2.40 L | ₹3.53 L | ₹5.93 L |
| 10% | ₹2.40 L | ₹5.26 L | ₹7.66 L |
| 12% | ₹2.40 L | ₹7.59 L | ₹9.99 L |
| 14% | ₹2.40 L | ₹10.76 L | ₹13.16 L |
Long-run returns from diversified equity funds have often fallen in this range, but no return is guaranteed and a single year can be far outside it.
Year by year at 12%
| Year | Invested so far | Value | Gain |
|---|---|---|---|
| 1 | ₹12,000 | ₹12,809 | ₹809 |
| 2 | ₹24,000 | ₹27,243 | ₹3,243 |
| 3 | ₹36,000 | ₹43,508 | ₹7,508 |
| 4 | ₹48,000 | ₹61,835 | ₹13,835 |
| 5 | ₹60,000 | ₹82,486 | ₹22,486 |
| 6 | ₹72,000 | ₹1.06 L | ₹33,757 |
| 7 | ₹84,000 | ₹1.32 L | ₹47,979 |
| 8 | ₹96,000 | ₹1.62 L | ₹65,527 |
| 9 | ₹1.08 L | ₹1.95 L | ₹86,822 |
| 10 | ₹1.20 L | ₹2.32 L | ₹1.12 L |
| 11 | ₹1.32 L | ₹2.75 L | ₹1.43 L |
| 12 | ₹1.44 L | ₹3.22 L | ₹1.78 L |
| 13 | ₹1.56 L | ₹3.76 L | ₹2.20 L |
| 14 | ₹1.68 L | ₹4.36 L | ₹2.68 L |
| 15 | ₹1.80 L | ₹5.05 L | ₹3.25 L |
| 16 | ₹1.92 L | ₹5.81 L | ₹3.89 L |
| 17 | ₹2.04 L | ₹6.68 L | ₹4.64 L |
| 18 | ₹2.16 L | ₹7.65 L | ₹5.49 L |
| 19 | ₹2.28 L | ₹8.75 L | ₹6.47 L |
| 20 | ₹2.40 L | ₹9.99 L | ₹7.59 L |
How this is worked out
A SIP is a series of equal monthly instalments, each compounding for the time it stays invested. The first ₹1,000 compounds for 240 months, the last for one. The maturity value is the sum of all 240 instalments with their growth, which is the future value of an annuity: M = P × ((1 + i)^n − 1) / i × (1 + i).
Here P is ₹1,000, i is the monthly rate (12% ÷ 12 = 1% a month) and n is 240 months. Each instalment is assumed to go in at the start of the month, as most SIP dates do, which is what the (1 + i) at the end accounts for.
The 12% is an assumption, not a promise. Equity fund returns arrive unevenly, so the real path will zigzag even if the average lands here. The table above shows how much the answer moves with the rate: at 10% the same SIP ends near ₹7.66 lakh, at 14% near ₹13.16 lakh.
Inflation matters as much as return over 20 years. At 6% a year, ₹9.99 lakh then buys roughly what ₹3.12 lakh buys today. Raising the SIP by 10% each year, in step with your salary, lifts the final figure to about ₹19.89 lakh for a total outlay of ₹6.87 lakh.
Frequently asked questions
Results are estimates for education and planning, not financial advice.
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