Total Value at Maturity
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SIP Compound Interest Calculator
The SIP Compound Interest Calculator breaks your final corpus into what you contributed and what compounding added — enter your monthly investment, expected annual return, and investment period to get your total value at maturity, total amount invested, total compound interest earned, and the wealth gained ratio showing returns as a percentage of your capital. Adjust any slider and all four figures update live, with the year-wise table showing cumulative compound interest at every annual checkpoint of your systematic investment plan. For more related tools, see the step-up sip calculator.
Results
Total Amount Invested
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Total Compound Interest Earned
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Wealth Gained Ratio
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Compound Interest Breakdown
Results Table
| Year | Amount Invested | Interest Earned | Total Value |
|---|
How SIP Compound Interest Works
In a systematic investment plan, the compound interest you earn is not applied to a single principal — it is applied simultaneously to hundreds of individual instalments, each compounding for a different number of months. Your first ₹5,000 instalment earns compound interest for the full tenure of the SIP. Your last instalment earns compound interest for just one month. The SIP compounding calculator aggregates all of this into a single total compound interest earned figure, showing you precisely how much of your final corpus came from the market versus how much you deposited yourself.
The wealth gained ratio output captures this in one number: compound interest earned divided by amount invested, expressed as a percentage. A wealth gained ratio of 93% means that for every ₹100 you invested in your systematic investment plan, compounding added another ₹93 on top. This ratio grows steeply with tenure and return rate — making it the single most persuasive argument for starting your SIP early and maintaining it for decades. Also explore the sip and swp calculator for a related calculation.
SIP Compound Interest Formula Explained
The SIP compound interest is simply the difference between the maturity value and the total amount invested:
Compound Interest = M − (P × n)
Where M is the maturity value from the Future Value of Annuity Due formula:
M = P × [(1 + r)ⁿ − 1] / r × (1 + r)
- P = Monthly SIP amount (₹)
- r = Monthly return rate = Annual return ÷ 12 ÷ 100
- n = Total months = Years × 12
Example: ₹5,000/month at 12% for 20 years → M ≈ ₹49.96 lakh, invested ₹12 lakh, compound interest ≈ ₹37.96 lakh. Wealth gained ratio = 316% — meaning compounding generated over 3× the amount you physically invested. Use the SIP interest calculator above to find your own wealth gained ratio at different return rates and tenures. Also explore the weekly sip calculator for a related calculation.
The Power of Compounding in a Systematic Investment Plan
The defining feature of a systematic investment plan is that compounding works on a growing base — not just a single principal. Every instalment you add becomes a new compounding base, and the returns on previous instalments compound further on top. This is why the compound interest earned in a SIP accelerates dramatically in later years:
| Tenure (₹5,000/month, 12% return) | Amount Invested | Compound Interest Earned | Wealth Gained Ratio |
|---|---|---|---|
| 5 years | ₹3.00 lakh | ₹1.12 lakh | 37% |
| 10 years | ₹6.00 lakh | ₹5.61 lakh | 93% |
| 20 years | ₹12.00 lakh | ₹37.96 lakh | 316% |
| 30 years | ₹18.00 lakh | ₹1.58 crore | 878% |
The compound interest earned in years 20–30 alone exceeds everything earned in years 1–20 combined. This is why financial planners consistently emphasise that the most valuable years in a systematic investment plan are the final years, and why every year you delay starting reduces compound interest earned not just for that year, but for every year it would have continued to compound.
Frequently Asked Questions
What is compound interest in a SIP?
In a systematic investment plan (SIP), compound interest is the returns earned on your previously accumulated returns — not just on the amount you invested. Each monthly instalment earns returns, and those returns are reinvested automatically (through NAV appreciation), earning further returns in subsequent periods. The SIP compounding calculator shows the total compound interest as the difference between your maturity corpus and the total amount you physically deposited across all instalments.
Does SIP use simple interest or compound interest?
SIP returns use compound interest (technically, it is capital appreciation through NAV growth, which behaves like compound interest). Each month, your investment earns returns on the current NAV, which includes all previously accumulated gains. Mutual funds do not pay periodic dividends in the Growth option — returns are reinvested through NAV appreciation, so you are effectively earning returns on returns every month. This is why the SIP compound interest calculator shows exponentially larger interest earned in later years compared to earlier years.
Why does the wealth gained ratio increase so sharply over time?
The wealth gained ratio increases because compound interest grows exponentially while your invested amount grows linearly. At ₹5,000/month, you add ₹60,000 to your invested total every year — a linear increase. But your compound interest earned grows at an accelerating rate because each year's returns compound on a larger base that now includes all previous returns. By year 20, the compounding base is so large that a single year's interest exceeds your entire annual contribution — which is when the wealth gained ratio starts climbing very rapidly.
How does compound interest in a SIP compare to a fixed deposit?
A fixed deposit earns compound interest at a fixed rate (typically 6.5–7.5% in India), which is guaranteed but fully taxable as income each year. A systematic investment plan in an equity mutual fund compounds at a variable rate historically averaging 10–15% CAGR, with LTCG tax of 12.5% only on gains exceeding ₹1 lakh at redemption — making post-tax compound interest from equity SIPs significantly higher than FDs for long-term horizons. Use the SIP compounding calculator above with a conservative 10% rate to see how compound interest on a systematic investment plan compares to FD returns over the same period.