Methodology
SIP Calculator Methodology
How TechTars calculates the future value of a Systematic Investment Plan (SIP), the formula used, the assumptions baked into the model, and the official sources we reference for return benchmarks.
By Yadav PatleLast updated:
Formula
FV = P × ((1 + r)^n − 1) / r × (1 + r)
Variables
| Symbol | Name | Description |
|---|---|---|
| FV | Future Value | The projected corpus at the end of the investment period. |
| P | Periodic investment | The fixed monthly contribution (in your account currency). |
| r | Monthly rate of return | Annual rate divided by 12 and divided by 100 (e.g. 12% p.a. → r = 0.01). |
| n | Number of periods | Total monthly contributions = years × 12. |
Worked example
₹10,000 monthly SIP for 10 years at 12% p.a.: r = 0.01, n = 120, FV = 10,000 × ((1.01)^120 − 1) / 0.01 × 1.01 ≈ ₹23,23,391. Total invested = ₹12,00,000. Wealth gain = ₹11,23,391.
Assumptions and limitations
Every model leaves something out. Here is what this calculator assumes, and what it does not model, so you can interpret the output honestly:
- Contributions are made at the start of each month (annuity-due).
- The annual rate is compounded monthly and held constant for the full period.
- No expense ratio, exit load, or tax (LTCG/STCG) is deducted. These are mentioned in the disclaimer and reduce real returns by 1.5–2.0% p.a. for most actively managed equity funds.
- Inflation is shown only via the optional toggle on the calculator and uses a 6% default unless overridden.
Authoritative sources
Where the formula, rates, or framework come from:
Try it now
Plug in your own numbers in the SIP Calculator and see the formula applied in real time.
This methodology page is for educational purposes only. Calculations are estimates; real-world results vary with taxes, fees, expense ratios, and market conditions. Yadav Patle is not a SEBI-registered investment adviser. For personalised advice, consult a registered adviser.