How SIP returns are calculated
Each monthly installment grows independently from the day it is invested. The first compounds for the full period, the last for barely a month. The future value sums all of them: FV = M × [((1+i)^n − 1) ÷ i] × (1+i), where M is the monthly amount, i the monthly return and n the number of months.
The projection assumes a constant return, which real markets never deliver. Actual returns arrive unevenly and the final value depends on sequence. Treat the result as a planning estimate, not a promise.
Why the final years matter most
Investing 500 a month at 12% for 15 years means contributing 90,000, with a projected value near 252,000. Nearly two thirds is growth, and most of that growth occurs in the final third of the period when the accumulated balance is largest.
This is the single strongest argument against stopping early. The steepest part of the curve is the part most people never reach.
Choosing a realistic return
Long-run equity index returns have historically averaged around 10 to 12% in India and 7 to 10% in developed markets, before inflation. Debt and hybrid funds return less. Planning with a conservative number and being pleasantly surprised beats planning around a best case.