A Systematic Investment Plan (SIP) invests a fixed sum — say ₹5,000 — into a mutual fund every month automatically. Two forces do the heavy lifting: rupee-cost averaging (you buy more units when markets fall) and compounding over years.
What rupee-cost averaging actually does
The same ₹10,000 buys more units when the price is lower. Over three instalments that pulls your average cost per unit below the price you would have paid on day one.
Scroll the chart sideways to see every year →
Illustration only. The three prices are made up to show the mechanism — they are not a market path and not a forecast. Real returns vary, and averaging only helps if you keep investing when the market falls.
How much can a SIP grow?
₹10,000/month for 15 years at 12% p.a. compounds to roughly ₹50 lakh, of which only ₹18 lakh is your contribution. Try the numbers yourself in our SIP calculator.
Move the sliders: what a SIP can grow into
Each bar is one year. The lower block is what you paid in; the upper block is what compounding added on top. Change any of the three assumptions and the chart, the totals and the table all move with it.
Total value ₹49,95,802 (₹18,00,000 paid in, ₹31,95,802 compounded)
- What you paid in
- What compounding added
View the numbers as a table
| Year | Paid in | Value |
|---|---|---|
| 1 | ₹1,20,000 | ₹1,26,825 |
| 2 | ₹2,40,000 | ₹2,69,735 |
| 3 | ₹3,60,000 | ₹4,30,769 |
| 4 | ₹4,80,000 | ₹6,12,226 |
| 5 | ₹6,00,000 | ₹8,16,697 |
| 6 | ₹7,20,000 | ₹10,47,099 |
| 7 | ₹8,40,000 | ₹13,06,723 |
| 8 | ₹9,60,000 | ₹15,99,273 |
| 9 | ₹10,80,000 | ₹19,28,926 |
| 10 | ₹12,00,000 | ₹23,00,387 |
| 11 | ₹13,20,000 | ₹27,18,959 |
| 12 | ₹14,40,000 | ₹31,90,616 |
| 13 | ₹15,60,000 | ₹37,22,091 |
| 14 | ₹16,80,000 | ₹43,20,970 |
| 15 | ₹18,00,000 | ₹49,95,802 |
Illustration only. Assumes the return you set is earned every year, compounded monthly, and every instalment paid on time. Actual mutual-fund returns vary and can be negative for long stretches; past compounding is not a guide to future compounding.
Three rules that matter
- Never stop SIPs in a crash — that is when averaging helps most.
- Step up the amount 10% yearly as income grows.
- Match fund risk to horizon: equity for 7+ years, hybrid/debt for shorter goals.
Educational content, not financial advice.