The two formulas behind the table
A lumpsum is the simple case. Money grows by a fixed factor each period, so the value after t years is A = P × (1 + r/n)^(n×t), where P is the amount invested, r the yearly rate as a decimal, and n the number of compounding periods per year. Pick yearly, quarterly or monthly compounding in the tool and only n changes.
A SIP is a stream of small lumpsums, each growing for a different length of time. This tool divides the yearly return by 12, assumes each instalment goes in at the start of the month, and adds them up. For a flat SIP the closed form is FV = M × [((1 + i)^N − 1) / i] × (1 + i), where M is the monthly amount, i = yearly rate / 12 / 100 and N is the number of months. The step-up option raises M by a fixed percentage at the start of each year, so there is no tidy single formula and the tool loops through the months.
The "value in today's money" column divides the future value by (1 + inflation)^years. It asks how much those rupees could buy at today's prices.
One worked example, computed
Say Aman, 30, starts a ₹10,000 SIP and assumes 12% a year for 15 years, with inflation at 6%.
- Monthly rate i = 12 / 12 / 100 = 0.01. Months N = 15 × 12 = 180.
- (1.01)^180 = 5.9958. So the bracket is (5.9958 − 1) / 0.01 = 499.58, and times 1.01 is 504.58.
- FV = 10,000 × 504.58 = ₹50,45,760.
- Money actually put in: 10,000 × 180 = ₹18,00,000. The remaining ₹32,45,760 is the assumed gain.
- Inflation factor: 1.06^15 = 2.3966. ₹50,45,760 / 2.3966 = about ₹21,05,419 in today's money.
The tool's loop matches that closed form to the paisa. The last line is the one people skip: a big-sounding number in 2041 buys far less than it looks.
Now change one input at a time, which is the real use of the tool:
- Return of 8% instead of 12% gives ₹34,83,451. That is ₹15.6 lakh lost to four points of return.
- Stopping at 10 years instead of 15 gives ₹23,23,391 on ₹12,00,000 invested. The last five years add roughly ₹27 lakh, which is why starting early and staying put matters more than picking the fund.
- A 10% yearly step-up, as if your SIP rises with your salary, turns ₹10,000 into ₹86,83,849 with ₹38,12,698 invested.
- A lumpsum of ₹15,00,000 at 12% for 15 years grows to ₹82,10,349 with yearly compounding, or ₹89,93,703 with monthly compounding. Same nominal rate, different effective rate: 12% compounded monthly is really 12.68% a year.
Mistakes that make the output misleading
Treating the return as a promise. Equity mutual funds do not pay 12% every year. They might give 35% one year and −20% the next, and the order of those years changes your real outcome, especially near the end. A fixed rate is only an average. Run 8%, 10% and 12% and plan on the lower one.
Ignoring inflation. Compare the "invested" and "in today's money" columns. If your goal is a fixed rupee target, such as a child's fee in 2040, inflate the target first, then solve for the SIP.
Mixing up rate types. A reported CAGR is already annualised, so do not compound it again. A quoted rate with quarterly compounding yields a little more than the headline.
Forgetting costs and tax. Expense ratio, exit load and capital gains tax all reduce what you keep. Taking 1 to 2 percentage points off the return is a rough adjustment.
Comparing SIP and lumpsum on the wrong basis. A SIP's average rupee works for about half the period. See SIP versus lumpsum.
What this tool does not model
It uses one constant return for the whole period, so it cannot show volatility, a market fall just before you need the money, or sequence risk. It ignores missed instalments and withdrawals, and applies no tax, expense ratio or exit load. Instalments are assumed at the start of the month, so a month-end SIP comes out slightly lower. For a big decision, talk to a SEBI-registered adviser, and see prepaying a home loan versus investing. For the loan side of the same maths, use the EMI calculator.
Questions people ask
Is the result guaranteed?
No. Market-linked returns vary and can be negative in any year. The figures show what would happen if the assumed rate held every single year, which it will not.
Which return should I assume for an equity SIP?
There is no correct number. Test 8, 10 and 12%. If your plan only works at the highest, it is too fragile.
Why does my SIP show a different value from my app?
Apps use actual NAVs and debit dates, so the real value moves daily. This tool uses an even monthly rate.
Should I use the step-up option?
If your income is likely to rise, yes. In the example a 10% yearly step-up lifted the gain from about ₹32 lakh to ₹48.7 lakh. Set it to a rise you can actually keep up.