Most people start a SIP with the question "how much can I afford?" and pick a round number — ₹5k, ₹10k. That's how SIPs get under-funded relative to actual needs.
The better question is: "how much do I need, by when?" — and let the formula solve for monthly contribution.
The reverse-engineering formula
Starting from the SIP future-value formula:
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
Solve for P (monthly contribution):
P = FV / ([((1 + r)^n − 1) / r] × (1 + r))
CalcMaster will ship this as a "goal calculator" mode soon. For now, you can iterate the SIP calculator until the future value matches your target.
Four common goals and their reverse-engineered SIPs
Assumptions: 12% expected return.
1. Down-payment on a house — ₹30 lakh in 7 years
P ≈ ₹22,500/month
If that feels too high, the right move is to lower the target (₹20L house), stretch the timeline (10 years instead of 7), or lower the expectation (debt funds at 8% — needs ₹26k/month to hit the same number).
2. Kid's college (overseas) — ₹1 crore in 18 years
P ≈ ₹14,000/month
The longer horizon makes the monthly far more manageable. Note: ₹1 crore in 18 years at 6% inflation is worth ~₹35 lakh in today's money, so check whether that's actually enough.
3. Retirement corpus — ₹5 crore in 30 years
P ≈ ₹16,000/month
The 30-year horizon is the friend here. Same target at 20 years would need ~₹50k/month — a 3x jump for a 33% time reduction. Time is the cheapest input in this formula.
4. Emergency fund — ₹6 lakh in 2 years (safe instrument, 7% return)
P ≈ ₹23,500/month
Short-horizon goals don't benefit from equity (too volatile), so use debt funds / FD recurring deposit. The lower return means a higher monthly contribution. There's no shortcut.
Inflation-adjust your goals
Most people set goals in today's rupees and then evaluate them in future rupees. That's how a "₹1 crore" retirement plan ends up insufficient.
Rule of thumb: at 6% inflation, money halves in real value every ~12 years.
So ₹1 cr in 24 years ≈ ₹25 L today. ₹1 cr in 36 years ≈ ₹12 L today. Translate your target.
A more honest version: set the goal in today's purchasing power (e.g., "I want a corpus that supports my current ₹80k/month lifestyle"), then inflate by 6%/year for the time horizon to get the future-rupee target, then run the SIP reverse-math.
The bucket strategy
Don't run one giant SIP for one giant goal. Split into buckets:
| Bucket | Horizon | Asset class | Annual return |
|---|---|---|---|
| Emergency fund | 0–6 months | Liquid fund | 6–7% |
| Short-term goals | 1–3 years | Debt fund | 7–8% |
| Medium-term | 3–7 years | Hybrid fund | 9–11% |
| Long-term | 7+ years | Equity fund | 11–14% |
Each bucket has its own SIP. The retirement bucket dominates in time but other buckets stop you from raiding equity when life happens.
Set up the goal, not just the SIP
The most common SIP failure mode isn't market loss — it's goal drift. Setting up a SIP with no explicit goal makes it easy to redeem early ("I'll just take this out for a vacation"). Naming it — "Maya's college", "Goa house", "FY2055 retirement" — makes it psychologically sticky.
Many fund apps now let you tag SIPs with goal names. Use the feature.
