How an SIP works
A Systematic Investment Plan is a way to invest a fixed amount in a mutual fund at a regular interval (monthly is most common). Each contribution buys units at the current NAV — when the NAV is low you get more units, when it’s high you get fewer. Over years this rupee-cost-averaging smooths out market timing risk.
The maturity value at the end is the sum of all units × the final NAV — but for projection purposes the standard SEBI formula assumes a constant annual return, which is what this calculator uses.
What return rate is reasonable?
| Fund type | Historical 10-yr CAGR | Assumption for projection |
|---|---|---|
| Large-cap equity | 11–13% | 10–12% |
| Mid/small-cap equity | 13–17% | 12–14% |
| Hybrid (balanced) | 9–11% | 8–10% |
| Debt | 6–8% | 6–7% |
| ELSS (tax-saver) | 11–14% | 10–12% |
These are educational ranges. Past performance is not indicative of future returns. BachatCalculator does not recommend specific funds.
Tax treatment
- ELSS SIPs count toward §80C up to ₹1.5L per FY (3-yr lock-in per instalment).
- Equity MF redemptions post-1-yr holding: LTCG at 12.5% (post-23-Jul-2024) on gains above ₹1L per FY.
- Equity MF redemptions within 1yr: STCG at 20% (post-23-Jul-2024).
- Debt MF (purchased post 1-Apr-2023): slab-rate taxation regardless of holding period (Finance Act 2023). See our debt MF capital gains calculator.
Where to start your SIP
Bridges
- Step-up SIP calculator — project annual % increase on contribution
- Lumpsum calculator — for one-time investments
- SWP calculator — for retirement withdrawal planning
- Section 80C calculator — quantify ELSS tax benefit
- LTCG equity calculator — tax on redemption gains