📈 What is SIP? How to Calculate Maturity Value and Wealth Gained

💡 What is SIP?

SIP (Systematic Investment Plan) is a disciplined way of investing in mutual funds. Instead of investing a large lump sum, you invest a fixed amount every month. Over time, these small contributions grow into significant wealth thanks to the power of compounding.

This disciplined strategy utilizes rupee cost averaging, at which you can buy more units when prices are lower and fewer when the prices are high, and the power of compounding. It allows your investments to grow exponentially over the long term, right?

🧮 How to Calculate SIP Maturity Value

The maturity value of SIP depends on three key factors:

1. Monthly Investment (SIP amount) – e.g., ₹15,000/month

2. Investment Tenure – e.g., 30 years

3. Expected Annual Return (CAGR) – e.g., 12% p.a.

The formula for SIP maturity is:

M=P×(1+r)n−1r×(1+r)M = P \times \frac{(1 + r)^n - 1}{r} \times (1 + r)M=P×r(1+r)n−1​×(1+r)

Where:

• MMM = Maturity Value

• PPP = Monthly SIP amount

• rrr = Rate of return per month (annual rate ÷ 12)

• nnn = Total months of investment

🌱 Wealth Gained from SIP

Wealth Gained = Maturity Value – Total Invested Amount

For example:

• SIP = ₹15,000/month

• Tenure = 30 years (360 months)

• CAGR = 12%

👉 Total Invested = ₹54,00,000
👉 Maturity Value ≈ ₹4,62,14,598
👉 Wealth Gained = ₹4,08,14,598

That’s the magic of compounding — your money grows faster the longer you stay invested.

🔑 Importance of Monthly Compounding

• Every SIP installment earns returns immediately.

• Earlier investments get more time to grow.

• Even a 1–2% increase in CAGR can make a huge difference over 10–20 years.

• That’s why consistency matters more than timing the market.

🖥️ Try It Yourself: SIP Calculator

How to use SmartLifeMoney’s systematic investment plan calculator?

You can use the SIP amount calculator from SmartLifeMoney within a few clicks.

Just enter the monthly invested amount (the amount for which you have started the SIP), the number of years for which you want to stay invested, and the expected rate of return and step-up percentage increase every year at your option for further increasing your returns.

As soon as you input the value, the calculator will show you the estimated amount you can avail after your investment tenure is complete.

Use the calculator below to experiment with your own SIP amount, tenure, and expected returns. See how much wealth you can build in 5, 10, 20 or 30 years.

✅ Conclusion

SIP is the simplest and most effective wealth-building strategy for professionals, NRIs, and CXOs. By investing regularly and letting compounding work, you can achieve financial freedom without stress.

💬 Have you started your SIP journey yet? Try the calculator above and share your results in the comments!