In short
An investment calculator estimates what regular monthly investing could be worth after a number of years, and how much of that value comes from your own contributions versus investment growth. In India this is called a SIP (systematic investment plan); elsewhere it is often called dollar-cost averaging or a monthly savings plan.
How the estimate is calculated
Each month you add the same amount, and everything already invested keeps growing at the expected rate. Because growth builds on earlier growth, the value rises faster in later years.
The calculator uses the standard formula for payments made at the start of each month: value = P × ((1 + i)^n − 1) ÷ i × (1 + i), where P is the monthly amount, i is the monthly return (the annual return divided by 12) and n is the number of months. With a yearly increase, the monthly amount is raised by that percentage every 12 months.
Worked example
Invest 500 a month for 20 years at an expected 8% a year. You put in 120,000 in total, and the investment could grow to about 296,474, so roughly 176,474 comes from growth rather than from your own money.
Increase the monthly amount by 10% each year and the result changes dramatically: you invest 343,650 in total and the value could reach about 663,746. Small, regular increases, for example in line with pay rises, make a large difference over long periods.
Why time matters more than timing
The biggest lever in the formula is the number of months. Starting five years earlier often adds more to the final value than a higher monthly amount started later. Investing a fixed amount every month also means you buy more units when prices are low and fewer when they are high, which smooths out market ups and downs.
Choosing a realistic expected return
Use a rate that matches what you actually invest in. Long-term averages are very different for savings accounts, bonds and shares, and past returns do not guarantee future ones.
Remember that fees and inflation reduce real returns. Try a lower rate as well to see a more cautious estimate, and check how sensitive the result is to the rate you choose.
Frequently asked questions
What is a SIP?
A SIP (systematic investment plan) is a way of investing a fixed amount at regular intervals, usually every month, in a mutual fund or similar product. This calculator works for any regular monthly investing, whatever it is called where you live.
Are returns guaranteed?
No. The expected return is an assumption, not a promise. Real investments go up and down, and the actual value can be higher or lower than this estimate.
Does the result include taxes, fees or inflation?
No. The calculator shows a value before taxes, fund fees and inflation. To get closer to a real-terms figure, lower the expected return by your expected fees and inflation.
What does the yearly increase do?
It raises your monthly amount by a fixed percentage every year. For example, 10% turns 500 a month into 550 in the second year and 605 in the third. Leave it at 0% for a constant amount.
Methodology
Contributions are made at the start of each month and returns compound monthly at the expected annual rate divided by 12. The optional yearly increase is applied every 12 months. Values are rounded for display only.
This calculator gives estimates for information only and is not financial advice. Investments can lose value; past performance does not guarantee future results.
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