Finance & Investments
6 min read
•Updated 2026-09-17
How SIP Return is Calculated: Future Value of Annuity & Compounding Math
A clear guide to calculating mutual fund SIP returns using the Future Value of Annuity Due formula.
By AnyCalcHub Wealth Research
Live Interactive Tool
Calculate Your Own Numbers Instantly
Run this calculation in your browser with real-time graphs and auto-save.
1. Future Value of Annuity Due Formula
Since SIP installments occur at the beginning of each monthly period, every individual payment compounds for a different duration. The mathematical summation simplifies into the standard Annuity Due formula.
Mathematical Formula
FV = P × [((1 + i)^n - 1) / i] × (1 + i)
Step-by-Step Worked Example
Monthly SIP (P)₹10,000
Expected Return12% p.a. (i = 0.01/mo)
Tenure10 Years (n = 120)
Step 1:Compute (1 + i)^n: (1.01)^120 = 3.30039
Step 2:Numerator: 3.30039 - 1 = 2.30039
Step 3:Divide by periodic rate: 2.30039 ÷ 0.01 = 230.039
Step 4:Multiply by annuity due factor (1.01): 230.039 × 1.01 = 232.339
Step 5:Multiply by monthly deposit: 10,000 × 232.339 = ₹2,323,391
Final Result: Total Invested: ₹1,200,000 | Future Value: ₹2,323,391
Frequently Asked Questions
Common questions and mathematical nuances for this calculation.
What is Rupee Cost Averaging in SIP?
When the market is down, your fixed monthly allocation buys more mutual fund units; when the market is up, it buys fewer units. Over time, your average purchase price per unit is minimized.
Try the Calculator
Launch CalculatorReady to calculate your own results?
Launch SIP Calculator with real-time sliders and instant graphs.
Related Calculation Guides
Mathematics