How a monthly investment plan works
A SIP — a systematic investment plan — is simply a fixed amount invested on a regular schedule. The calculator projects what those contributions could become if they earn a consistent annual return. It is a planning tool, not a promise.
You contribute
A fixed amount is added every month. The total invested is the contribution multiplied by the number of months.
The balance compounds
Each contribution starts earning a return from the month it is invested. Later contributions have less time to compound.
The result is a range
Returns are not fixed. Change the rate and the time horizon to see how sensitive the final balance is to both.
The formula behind the result
For a fixed monthly contribution, the future value is calculated as an annuity:
FV = P × ((1 + r)^n − 1) / r × (1 + r) P = monthly contribution r = monthly return (annual rate ÷ 12) n = number of months
The final (1 + r) term assumes each contribution is made at the start of the month. If contributions are made at the end, remove it. The difference is small for long horizons but worth knowing when you compare two calculators.
What the projection assumes
- The contribution stays the same, unless you add a step-up.
- The annual return is constant; real markets are not.
- No fees, taxes or inflation are deducted unless you enable them.
What it cannot tell you
- Whether a particular fund will achieve the return you enter.
- How taxes in your country will treat the gain.
- What the balance will buy after inflation.
A quick example
Investing $500 a month for 20 years at an assumed 12% annual return produces a balance of roughly $500,000. Your contributions total $120,000, so most of the final balance is compounding rather than new money. Change the return to 8% and the balance falls sharply — which is why the rate is an assumption, not a guarantee.
Use the investment calculator for a one-time lump sum, or the retirement calculator to work backwards from a target income.