Question 1

How is SIP return calculated?

Accepted Answer

SIP returns are calculated using XIRR (Extended Internal Rate of Return), which accounts for the timing of each monthly investment. For a simplified estimate, the SIP maturity formula uses compound interest: M = P × [(1 + r)^n – 1] / r × (1 + r), where P is the monthly SIP amount, r is the monthly rate of return (annual rate ÷ 12), and n is the number of months. This calculator uses this formula to show estimated maturity value and total returns.

Question 2

What is a step-up SIP?

Accepted Answer

A step-up SIP (also called a top-up SIP) automatically increases your monthly SIP amount by a fixed percentage each year. For example, starting a ₹5,000 SIP with a 10% annual step-up means your SIP becomes ₹5,500 in year 2, ₹6,050 in year 3, and so on. Step-up SIPs significantly increase your corpus over long periods. The step-up SIP tab in this calculator shows the impact of annual increases on your final maturity amount.

Question 3

How much ELSS investment qualifies for tax deduction under 80C?

Accepted Answer

ELSS (Equity Linked Savings Scheme) investments qualify for deduction under Section 80C of the Income Tax Act up to a maximum of ₹1,50,000 per financial year under the old tax regime. ELSS has a 3-year lock-in period — the shortest among all 80C instruments. Returns above ₹1 lakh per year are taxed at 10% as long-term capital gains. Note: 80C deductions are not available under the new tax regime.

Question 4

What is the difference between lump sum and SIP investment?

Accepted Answer

A lump sum investment means investing the entire amount at once, while a SIP spreads the investment in equal monthly instalments. SIP reduces timing risk through rupee cost averaging — you buy more units when markets are low and fewer when high. Lump sum works better when markets are at a low point. SIP is recommended for salaried individuals investing from monthly income. The lump sum vs SIP tab in this calculator compares the maturity value of both approaches.

Question 5

How do I calculate how much I need to invest monthly to reach a financial goal?

Accepted Answer

To reach a financial goal, use the Goal Planner tab. Enter your target amount, expected return rate, and investment horizon. The calculator works backwards to tell you the exact monthly SIP amount needed. For example, to accumulate ₹50 lakh in 15 years at 12% expected return, you need a monthly SIP of approximately ₹10,000.

Mutual Fund SIP Calculator

SIP Calculator

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ELSS & Tax Benefit

Investing Smarter Starts with Right Tax Planning