How SIP works

What a SIP really does

A SIP invests a fixed amount on a schedule (often monthly) into a mutual fund scheme. Each instalment buys units at that day’s NAV. Over time you accumulate units; the rupee value of those units moves with the market.

A SIP does not guarantee returns. It is a contribution habit plus market exposure—not a fixed deposit.

What calculators assume

Most SIP calculators convert an annual expected return into a monthly rate and compound contributions. That is useful for planning ranges, but real NAVs bounce around. Treat outputs as scenarios, not promises.

• Higher assumed return → higher projected corpus (sensitivity matters)
• Longer tenure → more contributions and more compounding time
• Step-ups increase contributions over time if you can afford them

Practical tips

Align SIP size with cash flow after emergency reserves and high-interest debt. Revisit amount yearly. Prefer understanding the risk of the underlying fund over chasing a single “best” projected number.

Related calculators

• SIP Calculator
• Step-Up SIP

Keep reading

• SIP vs lump sum
• SIP for beginners