Calculation Methodology & Mathematical Formulas

Last Updated: May 2026 • mysipcalc.in Financial Engineering Standards

To maintain complete transparency and mathematical rigor, this page details the exact financial formulas, compounding logic, and operational assumptions used in all calculators across mysipcalc.in.

1. Standard SIP Formula (Future Value of Annuity)

In a Systematic Investment Plan (SIP), installments are contributed at the beginning of each monthly cycle (annuity due). The total future corpus is calculated using the Future Value of an Annuity formula:

FV = P × [ { (1 + i)^n - 1 } / i ] × (1 + i)

Variables Definition:

FV: Future Value (Total maturity amount at the end of the investment tenure).
P: Monthly investment amount (₹).
i: Periodic monthly rate of return = Annual Expected Return (r) / 12 / 100.
n: Total number of monthly installments = Tenure in Years (t) × 12.

Total Invested Amount: Total Invested = P × n
Estimated Wealth Gained: Est. Returns = FV - Total Invested

2. Lumpsum Formula (Compound Annual Growth)

For a one-time lump-sum mutual fund investment, returns are compounded continuously based on the annual compounding rate (CAGR):

A = P × (1 + r / 100)^t

Variables Definition:

A: Total maturity amount.
P: Initial principal investment amount.
r: Annual expected rate of return (%).
t: Total investment duration in years.

3. Step-Up (Top-Up) SIP Formula

A Step-Up SIP increases the monthly installment by a fixed percentage (s%) at the start of each succeeding year. Because installments change annually, the total maturity corpus is the sum of compounding future values across each annual tranche:

FV_total = Σ [ Year_k_Installments_FV ] for k = 1 to t

Where for year k:

Monthly installment in year k: P_k = P_1 × (1 + s / 100)^(k - 1)
Remaining compounding period for year k contributions: Compounded until year t.

4. SWP (Systematic Withdrawal Plan) Formula

In an SWP, a fixed monthly payout (W) is withdrawn from an initial corpus (C_0) while the remaining balance continues to earn the periodic return (i):

C_m = (C_(m-1) - W) × (1 + i)

Where:

C_m is the remaining balance at month m.
W is the monthly withdrawal amount.
i is the monthly rate of return (Annual Return / 12 / 100).

5. Real Rate of Return (Inflation Adjustment)

To evaluate the real purchasing power of the future corpus, we apply the Fisher Equation:

Real Rate of Return = [ (1 + Nominal Rate) / (1 + Inflation Rate) ] - 1

6. Key Operational Assumptions & Disclaimers

Consistent Compounding: Returns are calculated assuming a uniform average growth rate throughout the tenure. In reality, equity markets fluctuate with market volatility.
Pre-Tax Projections: Unless explicitly noted in our tax guides, standard calculator outputs represent gross returns before capital gains tax deductions (LTCG / STCG) and expense ratios (TER).
No Guarantees: Projections provided by mysipcalc.in are for educational planning purposes only and do not represent guaranteed or promised investment outcomes.