How this calculator works
Most calculators online handle one thing at a time: a SIP calculator, a lumpsum calculator, a step-up calculator and a separate SWP calculator. Real financial lives don't work in pieces. This calculator joins every phase of the journey into one continuous timeline.
Build
Your lumpsum is invested on day one, and your monthly SIP goes in every month. With a step-up, the SIP rises every year, usually in line with your income.
Compound
After the SIP stops, no new money goes in, but the corpus stays invested and keeps compounding until you start withdrawing.
Withdraw
Once withdrawals start, a monthly SWP pays you an income, stepping up each year for inflation, while the rest of the corpus stays invested.
The maths behind it
The calculator runs month by month rather than using a single shortcut formula, which is how it handles step-ups, a stop year and withdrawals together. Each month:
Where r is the annual return for that phase. The SIP for any year is:
A plain SIP with no step-up gives the same result as the standard SIP future value formula:
Here P is the monthly SIP, i the monthly rate and n the number of months.
Lumpsum vs SIP vs SWP
- Lumpsum puts all the money to work at once. It benefits most from time in the market.
- SIP invests a fixed amount every month. It builds discipline and averages your purchase cost across market cycles.
- SWP reverses the flow. It pays you a fixed amount every month from your corpus, which suits retirement income.
Frequently asked questions
What is a SIP?
A Systematic Investment Plan (SIP) invests a fixed amount in a mutual fund every month. It builds the habit of investing and spreads your purchases across market ups and downs.
What is a step-up SIP?
A step-up SIP increases your monthly SIP amount by a fixed percentage every year, usually in line with salary growth. A 10% step-up on a ₹25,000 SIP means ₹27,500 a month in year two and ₹30,250 in year three.
What happens after I stop my SIP?
Your existing corpus stays invested and keeps compounding at the assumed return, even though no new money goes in. Here, the corpus compounds from the year the SIP stops until withdrawals begin.
What is an SWP?
A Systematic Withdrawal Plan lets you withdraw a fixed amount from your mutual fund corpus every month while the rest stays invested. It is commonly used to create a regular income in retirement.
How does this calculator compound returns?
It assumes monthly compounding at one-twelfth of the annual return. SIP instalments and SWP withdrawals are applied at the start of each month, and step-ups apply at each year boundary.
Are these returns guaranteed?
No. The returns you enter are assumptions for illustration. Mutual fund returns are market-linked and can be higher or lower than the rate used here. Taxes and fund expenses are not included.