How SIPs actually compound
Why a fixed monthly investment grows, and how much of it is returns rather than your own money.
What a SIP is
A Systematic Investment Plan invests a fixed amount every month into a mutual fund. Because markets move up and down, a fixed instalment buys more units when prices are low and fewer when they're high — this averaging is the point. Over long periods, the bigger force is compounding: the returns you earned last month start earning returns themselves.
A worked example
₹10,000 a month at a 12% expected annual return, held for 10 years. These figures come from the same SIP engine the app uses, compounding each instalment monthly.
Maturity value
₹23.23 L
₹23,23,391
Total invested
₹12.00 L
₹12,00,000
Estimated returns
₹11.23 L
94% on what you invested
You put in ₹12,00,000 of your own money and end with ₹23,23,391 — so roughly ₹11,23,391is growth you didn't have to fund from salary. That gap is compounding doing the work: the longer the period, the larger the share that growth represents.
Year by year
Notice the value curve steepening — early years are dominated by what you contribute, later years by what the returns themselves add.
| Year | Invested | Value |
|---|---|---|
| 1 | ₹1,20,000 | ₹1,28,093 |
| 2 | ₹2,40,000 | ₹2,72,432 |
| 3 | ₹3,60,000 | ₹4,35,076 |
| 4 | ₹4,80,000 | ₹6,18,348 |
| 5 | ₹6,00,000 | ₹8,24,864 |
| 6 | ₹7,20,000 | ₹10,57,570 |
| 7 | ₹8,40,000 | ₹13,19,790 |
| 8 | ₹9,60,000 | ₹16,15,266 |
| 9 | ₹10,80,000 | ₹19,48,215 |
| 10 | ₹12,00,000 | ₹23,23,391 |
Why step up?
Your income usually rises each year, but a fixed SIP does not. Raising the instalment by 10% a year on the same ₹10,000 plan lifts the maturity value to ₹33,74,326 and the final monthly contribution to ₹23,579 — yet the extra you actually put in is small next to the extra growth it earns, because every increase compounds for the remaining years.
The step-up variant still runs through the exact same engine — the plain SIP is just the step-up formula with a 0% increase — so the two calculators can never disagree with each other.