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Compound Interest & SIP Calculator

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See exactly how your money grows when you start with an initial amount, add to it every month, and let compounding do the heavy lifting.

What is compound interest?

Compound interest is interest you earn on both your original investment and the interest already accumulated. Over long horizons it produces dramatic growth. A ₹10,000 monthly SIP at 12% for 25 years grows to roughly ₹1.9 crores — of which only ₹30 lakhs is your contribution and ₹1.6 crores is pure compounding.

The standard formula for the future value of a series of monthly contributions is:

FV = P × ((1 + r)^n − 1) ÷ r

where P is the monthly contribution, r is the monthly interest rate (annual ÷ 12 ÷ 100), and n is the total number of months. Add Initial × (1+r)^n to account for any lump-sum starting amount.

Real example

Take a salaried professional in Bangalore who starts a ₹5,000 monthly SIP at age 25 in a Nifty 50 index fund. Assuming a 12% long-term annualised return (close to the historical Nifty 50 average), here's what they'd have at different ages — without ever stepping up the amount:

The same person starting at 35 with ₹10,000 per month and stopping at 60 (25 years, ₹30 lakh contributed) finishes with about ₹1.89 crore. They contributed ₹9 lakh more but ended up with ₹1.35 crore less — purely because they started a decade later. This is the most important lesson in investing in India: time in the market beats timing the market.

How to use this calculator

  1. Enter how much you have to invest right now (or 0 if starting from scratch).
  2. Enter how much you can comfortably contribute every month.
  3. Set a realistic expected annual return — 10–12% is a reasonable long-term equity index assumption.
  4. Choose your time horizon. Compounding rewards patience — 20+ years is where it really compounds.
  5. Click Calculate growth to see your projected future value and a year-by-year breakdown.

The two levers that matter most

Time beats amount. Starting at age 25 with ₹5,000 a month and stopping at 35 will out-perform starting at 35 with ₹15,000 a month and continuing to 65 — assuming the same return. Don't wait for "more money"; start now.

Worked example: ₹5,000 monthly SIP for 20 years

Take a salaried professional in Bangalore who starts a ₹5,000 monthly SIP at age 25 in a Nifty 50 index fund. Assuming a 12% long-term annualised return (close to the historical Nifty 50 average), here's what they'd have at different ages — without ever stepping up the amount:

The same person starting at 35 with ₹10,000 per month and stopping at 60 (25 years, ₹30 lakh contributed) finishes with about ₹1.89 crore. They contributed ₹9 lakh more but ended up with ₹1.35 crore less — purely because they started a decade later. This is the most important lesson in investing in India: time in the market beats timing the market.

What returns to assume for Indian SIPs

For long-term equity SIPs in India, 12% is the most-used assumption — close to the long-term Nifty 50 average. For hybrid (equity + debt) funds, 9–10%. For debt mutual funds, 7–7.5%. Always test a "pessimistic" scenario at 2 percentage points lower than your headline assumption. Indian equity has historically returned 11–14% over rolling 15-year windows, but year-by-year results swing from −20% to +35%.

Step-up SIP: the one feature that matters most

A flat ₹5,000 SIP for 20 years at 12% reaches ₹50 lakh. The same SIP with a 10% annual step-up (you increase the contribution by 10% each year) reaches ₹95 lakh — almost double, for the same starting commitment. Most Indian platforms (Zerodha Coin, Groww, Kuvera, ET Money) support step-up SIPs natively. Set it once, never touch it again.

Tax on SIP returns in India (FY 2025–26)

For equity-oriented mutual funds held longer than 12 months, long-term capital gains (LTCG) are taxed at 12.5% on gains above ₹1.25 lakh per financial year. Short-term gains (units sold within 12 months) are taxed at 20%. Debt funds are taxed at your income-tax slab rate regardless of holding period. The calculator on this page shows pre-tax figures — subtract the LTCG tax for a realistic in-hand number on equity SIPs.

Disclaimer

This calculator produces estimates based on a constant assumed return. Real markets do not behave that way. Past performance does not guarantee future results. Mutual fund investments are subject to market risk; please read all scheme-related documents carefully before investing. Consult a SEBI-registered investment advisor before making any consequential investment decision.

Frequently asked questions

What's a realistic return rate?

Long-term equity index funds in major markets average 9–12% annually. Bond funds 4–6%. Bank deposits 3–7%. Pick a rate that matches the type of investment you're modelling.

Does this account for inflation?

No. The numbers are nominal. To get real (inflation-adjusted) returns, subtract the expected inflation rate from your return rate before entering it.

Are taxes included?

No. Returns are pre-tax. Tax treatment varies hugely by jurisdiction and vehicle.

What about market volatility?

This calculator assumes a steady annual return, which never happens in real markets. It's a long-term projection tool, not a year-by-year prediction.

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