How it works
Each monthly instalment is treated as a separate investment that compounds for the months remaining in your period. The instalment you pay in month one compounds the longest, and the final instalment barely compounds at all — which is why starting earlier matters more than investing larger amounts later.
The calculator converts your expected annual return into a monthly rate by dividing by 12, then compounds every instalment forward to the end of the period. Contributions are assumed to be made at the start of each month, which is the convention most Indian SIP calculators use.
More detail
Your total contribution is simply the monthly amount multiplied by the number of instalments. Estimated returns are whatever the projected corpus exceeds that contribution by — the calculator never assumes a return that is not implied by the rate you entered.
The rate is held constant for the entire period. Real equity funds do not deliver the same return every year, so treat the output as a planning estimate rather than a forecast of what a specific fund will do.
If your contribution will rise with your income each year, model it with the step-up SIP calculator.
If you know the amount you need rather than the amount you can invest, work backwards with the goal-based SIP calculator.
To see what the projected corpus would be worth in today's money, run it through the inflation calculator.