How Much Should You Invest in SIP Every Month?
Rather than guessing a SIP amount, you can reverse-engineer it from your goal: decide the target corpus, the time horizon, and an assumed annual return, then calculate the required monthly investment. For example, to build ₹1 crore in 15 years at 12% CAGR, you need a SIP of approximately ₹20,000/month. A commonly cited rule is to save at least 20% of your take-home pay, allocating a portion to SIPs based on your goal timeline and risk appetite.
Frequently asked questions
Quick answer
How do I calculate how much SIP I need for a specific goal?
Use the future value formula in reverse: FV = P × [((1 + r)^n – 1) / r] × (1 + r), where P is monthly SIP, r is monthly return, and n is number of months. Most SIP calculators let you enter your target corpus, years, and expected return to instantly compute the required monthly amount.
How do I calculate how much SIP I need for a specific goal?
Use the future value formula in reverse: FV = P × [((1 + r)^n – 1) / r] × (1 + r), where P is monthly SIP, r is monthly return, and n is number of months. Most SIP calculators let you enter your target corpus, years, and expected return to instantly compute the required monthly amount.
What return should I assume for SIP calculations in India?
For large-cap or index funds, a conservative assumption of 10–12% CAGR is widely used for planning purposes. For mid/small-cap funds, 12–15% is sometimes assumed, but higher return estimates carry more uncertainty — it is safer to plan at 10–11% and treat anything above that as a bonus.
How much SIP should a person earning ₹50,000/month do?
A common starting point is 20% of take-home pay, which would be ₹10,000/month for a ₹50,000 salary. After accounting for emergency fund, insurance premiums, and short-term goals, a realistic equity SIP allocation might be ₹5,000–₹8,000/month depending on your liabilities.
Should I increase my SIP every year?
Yes — a Step-Up SIP (also called Top-Up SIP) increases your monthly investment by a fixed percentage (typically 10–15%) each year, in line with salary increments. Increasing a ₹10,000 SIP by 10% annually can nearly double your final corpus compared to a flat SIP over 15 years.