A sip calculator tells you exactly how much a fixed monthly investment could grow to over time, plus your total invested and the estimated returns. Here’s what it does, how the numbers stack up, and how to read the results so you can see the difference between what you put in and what you might get back.
What the sip calculator does
A sip calculator applies the same maths banks use for compound interest, but to regular deposits instead of a single lump sum. It uses three inputs—your monthly amount, the number of years, and the expected annual return—and runs them through the compound-growth formula month by month. It doesn’t estimate; it shows the precise balance if every return stays exactly as you set it.
For example, £200 a month at 7% over 10 years means £24,000 invested and a projected balance of £38,100. The extra £14,100 comes from compound growth on every deposit: the first £200 earns interest for 120 months, the next for 119, and so on down to the final payment.
The calculator’s strength is also its weakness. If actual returns swing above or below your fixed rate, the projected figure moves with them. It also ignores lump-sum top-ups, missed payments, or fees that shave returns. Pull money out early and the whole schedule changes, so the final number is only as reliable as your discipline.
How to work it out by hand
- Enter the amount you will invest every month.
- Enter the annual return you expect (%).
- Enter how many years you will keep investing.
- See the projected future value, total invested and returns.
FV = P × [ (1 + r)^n − 1 ] ÷ r, where r = monthly rate, n = number of monthsSIP vs Lump Sum Investment Growth Over 5 Years
| Investment Method | Starting Amount | Growth After 5 Years |
|---|---|---|
| Monthly SIP (₹5,000) | ₹300,000 invested | ₹389,672 (13.22% annual return) |
| Lump Sum (₹300,000) | ₹300,000 invested | ₹418,778 (12.50% annual return) |
| Monthly SIP (₹10,000) | ₹600,000 invested | ₹779,344 (13.22% annual return) |
Why the gap between hope and reality matters
People often mistake the calculator’s number for a guaranteed balance. A 25-year-old investing £500 a month at 8% for 30 years might see £700k projected, but if fees cost 1% a year and returns drop to 6%, the balance could fall to £500k. That £200k difference can decide when you retire, buy a house, or help the kids. A wrong projection only becomes obvious once it’s too late to adjust.
Once you grasp how the calculator works, you can stress-test decisions. Increase the monthly amount by £50, push retirement back two years, or cut the expected return to 5%. Small changes compound into large swings in the final figure. You swap vague hopes for clear, testable plans.
Real sums with real numbers
Standard 20-year £300 monthly at 6%
You put in £300 every month for 20 years, so total invested = 300 × 240 = £72,000. The calculator applies 0.5% monthly growth (6% ÷ 12). After 240 months the balance is £119,200. The extra £47,200 is pure compound growth on each deposit as it earns interest in turn.
Odd £175 monthly at 5.75% for 8 years
You invest £175 a month for 96 months, so total in = 175 × 96 = £16,800. The calculator uses 0.479% monthly (5.75% ÷ 12). Rounding each month’s growth to the nearest penny gives a final balance of £20,750. The last payment only earns one month’s interest, so the rounding matters more than you’d think.
Three traps that wreck the numbers
| Common mistake | What to do instead |
|---|---|
| Mixing up annual and monthly returns | Always divide the yearly return by 12 to get the monthly rate. Putting 8% straight in gives an answer that’s far too high because the calculator compounds it 12 times a year instead of once. |
| Ignoring the effect of fees | Subtract fees from the expected return before you run the numbers. A 2% fee on an 8% return turns it into 6%, which cuts the final balance by a fifth over 30 years. |
| Using the ending balance as the total gain | Subtract the total you put in to see the true gain. A £500k balance sounds great until you remember it includes £300k of your own money. |
Use our free sip calculator
| Tool | What it does |
|---|---|
| SIP Calculator | See what a fixed monthly investment could grow to, plus your total invested and estimated returns. |
Try the SIP Calculator
Skip the manual maths — enter your numbers and get the answer instantly.
Open the SIP Calculator →When to trust the calculator and when not to
Small differences in interest rate, term or timing can add up to large sums over the years. Before committing to any financial decision, run a few different scenarios so you can see the full picture and choose with confidence.
Quick reminders before you go
- The calculator’s number is a projection, not a guarantee—returns vary every year.
- Round each month’s growth to the penny; small rounding errors add up over decades.
- Compare two scenarios by changing only one input at a time so you see what actually moves the needle.
Frequently asked questions
Is the return guaranteed?
No. Market-linked investments go up and down, so the return you enter is only an estimate. The calculator shows a projection, not a promise.
What return should I assume?
That assumption does all the work here, and this calculator cannot pick it for you — it compounds whatever you type. Take the figure from the fund’s own published long-run returns or another source you can check, remember it is before fees, tax and inflation, and try a cautious number too: over twenty years the gap between an optimistic and a pessimistic rate is far wider than most people expect.
Start or end of month?
This calculator assumes each contribution is invested at the end of the month. Investing at the start would give a slightly higher result.
