How a SIP grows
A systematic investment plan puts a fixed amount into a mutual fund every month. Each instalment compounds for the remaining period, so early instalments do most of the work. A yearly step-up — raising the SIP as your salary grows — can nearly double the final corpus over 20 years.
Taxes when you redeem
Equity fund units held over 12 months are long-term: gains above ₹1.25 lakh in a financial year are taxed at 12.5% plus cess. Each SIP instalment has its own 12-month clock, and units are redeemed first-in-first-out.
What return to assume
Long-term large-cap equity funds in India have historically delivered roughly 10–13% a year, but past returns do not guarantee future results. Use 7–8% for hybrid or debt funds.
FAQ
How much will ₹10,000 SIP become in 15 years?
At 12% a year, a flat ₹10,000 monthly SIP for 15 years grows to about ₹48 lakh on ₹18 lakh invested. With a 10% annual step-up it becomes roughly ₹83 lakh on ₹38 lakh invested.
Is SIP return taxable?
Yes, when you redeem. For equity funds, gains on units held over 12 months are taxed at 12.5% above ₹1.25 lakh a year; units held 12 months or less are taxed at 20%.
What is a step-up SIP?
A SIP that increases by a fixed percentage or amount every year, matching salary growth and building a much larger corpus.