How the goal calculator works
Enter four things: what the goal costs in today's rupees, how many years away it is, what you have already saved for it, and the inflation rate you expect for that kind of expense. The calculator then does three steps in order — inflate, grow, and solve.
First, the target is inflated to its year, because prices do not stand still. Second, the savings you have earmarked for this goal are grown at your assumed return for the same number of years. The difference between the two is the shortfall — the part you still have to fund. Third, that shortfall is converted into a monthly SIP using the same annuity-due maths the SIP calculator uses, so each instalment is treated as invested at the start of the month.
The assumed return is pre-filled from the horizon, because a two-year goal should not be priced at equity returns: 6.5% for three years or less, 9% for three to seven years and 12% beyond seven. You can override it. If you enter your monthly income, the calculator also shows the required SIP as a share of income and warns you when it crosses half of it — a signal to extend the horizon, cut the target or split the goal, rather than to assume a higher return.
The formula, step by step
Three standard formulas run in sequence. The first two are compounding; the third is the future value of an annuity due, rearranged to solve for the instalment.
Formula
Target(n) = C × (1 + i)^n ; Savings(n) = S × (1 + r)^n ; SIP = (Target − Savings) ÷ [((1 + m)^N − 1) / m × (1 + m)]
- Where:
- C
- = cost of the goal in today's rupees
- i
- = assumed annual inflation for this goal, as a decimal
- n
- = years until you need the money
- S
- = savings already earmarked for this goal
- r
- = assumed annual return, as a decimal
- m
- = monthly return = annual return ÷ 12 ÷ 100
- N
- = number of monthly instalments = n × 12
If you assume a 0% return the SIP is simply the shortfall divided by the number of months — the calculator handles that case without dividing by zero.
Worked example in rupees
Suppose your child's higher education costs ₹25,00,000 at today's prices, it is fifteen years away, you have ₹2,00,000 already set aside, you assume 10% education inflation and a 12% return.
- Inflated target = ₹25,00,000 × (1.10)^15 = ₹1,04,43,120
- Existing savings grow to ₹2,00,000 × (1.12)^15 = ₹10,94,713
- Shortfall = ₹1,04,43,120 − ₹10,94,713 = ₹93,48,407
- Required monthly SIP = ₹18,527, and over 15 years you would invest ₹33,34,906 in total
- Funding split: existing savings cover about 10.5% of the inflated target, the SIP the remaining 89.5%
Notice how much of the answer is inflation. Run the same goal at 0% inflation and the SIP falls to ₹2,785; at 6% it is ₹9,705, at 7% ₹11,500 and at 10% ₹18,527. Choosing an inflation rate is therefore the single most consequential input on the page — education has historically run hotter than general inflation, which is why 10% is a common assumption for it.
This illustration assumes a constant 12% a year, assumed for this example; it is not a forecast. For reference, AMFI Best Practices Circular No. 109/2023-24 prescribes 12.93% for equity-fund illustrations: the mean of 10-year rolling returns of the Nifty 50 between 01/06/2013 and 30/05/2023 (Sensex 12.64%, 10-year G-Sec 7.20%). Calculators accept rates up to 13%.
Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Comparison: how the horizon changes everything
| Years to goal | Inflated target | Shortfall after savings | Monthly SIP | Total invested |
|---|---|---|---|---|
| 10 years | ₹64,84,356 | ₹58,63,187 | ₹25,235 | ₹30,28,257 |
| 15 years | ₹1,04,43,120 | ₹93,48,407 | ₹18,527 | ₹33,34,906 |
| 20 years | ₹1,68,18,750 | ₹1,48,89,491 | ₹14,902 | ₹35,76,525 |
The target more than doubles between year 10 and year 20, yet the monthly SIP falls by 41%, because compounding has longer to work. Starting earlier gives compounding more years to work, which lowers the monthly amount the goal needs.
Short goals behave differently, because the assumed return is lower. A ₹10,00,000 goal at 6% inflation needs ₹29,890 a month over three years at 6.5%, ₹17,611 a month over five years at 9%, and only ₹4,750 a month over fifteen years at 12%.
This illustration assumes constant rates of 12%, 6.5%, 9% a year, assumed for this example; it is not a forecast. For reference, AMFI Best Practices Circular No. 109/2023-24 prescribes 12.93% for equity-fund illustrations: the mean of 10-year rolling returns of the Nifty 50 between 01/06/2013 and 30/05/2023 (Sensex 12.64%, 10-year G-Sec 7.20%). Calculators accept rates up to 13%.
Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Choosing sensible inputs
- Inflation by goal type: education has typically run well above headline inflation, property and weddings somewhat above, everyday goals around the general rate. Use a higher figure when the goal cannot be postponed.
- Return by horizon, not by hope: under three years, capital protection matters more than growth. Equity-oriented funds are usually considered for horizons beyond five to seven years.
- Earmark savings honestly: only count money actually reserved for this goal. Your emergency fund is not education money.
- Check affordability: if the SIP is more than half your monthly income, the plan is not a plan. Extend the horizon, reduce the target, or fund the goal in stages.
- Re-run the plan every year: salaries, prices and returns all move. A step-up SIP that rises with your income closes the gap faster than a flat one.
- Do not treat the assumed return as a promise. Re-run the numbers at 8% and 10% to see how much slack the plan has.
Taxes and the goal amount
The corpus this calculator shows is a pre-tax figure. When you redeem to fund the goal, gains are taxed by fund category and holding period. For equity-oriented funds, gains on units held more than 12 months are long-term and taxed at 12.5% on the amount above ₹1.25 lakh in a financial year; units held for 12 months or less are short-term and taxed at a higher rate. Debt and hybrid categories follow their own rules — check the current treatment for what you actually hold.
A practical response is to plan a glide path rather than a single redemption: shift the corpus gradually from equity to lower-volatility categories in the last two to three years before the goal date, and stagger redemptions across financial years where that suits your tax position. This does not remove market risk, but it reduces the chance that one bad quarter lands on the month you need the money.
Frequently asked questions
Why does the goal calculator inflate my target?
Because the price you pay is the price in the year you pay it. At 10% inflation, a ₹25 lakh cost today is ₹1.04 crore in fifteen years. Planning against today's number quietly guarantees a shortfall.
What inflation rate should I use?
It depends on the goal. Education costs have historically risen faster than general prices, so a higher assumption is common; everyday goals are often planned at a general rate. Whatever you choose is an assumption — run the plan at two rates and see how much the SIP moves.
Where does the default return come from?
From your horizon: 6.5% for goals three years or nearer, 9% for three to seven years, and 12% beyond seven years. These are assumptions used to keep short goals off equity-level expectations, not forecasts. You can change the rate.
How is the required SIP calculated?
The shortfall is divided by the future-value factor of an annuity due: [((1 + m)^N − 1) / m] × (1 + m), where m is the monthly return and N the number of instalments. It is the SIP formula run backwards.
What if I already have savings for the goal?
Enter them. They are grown at the same assumed return for the same number of years, and only the remaining shortfall is converted into a SIP. The calculator shows what share of the goal your existing savings are expected to fund.
The required SIP is more than I can afford. What now?
Four levers: extend the horizon, reduce the target, increase what you start with, or raise the SIP over time with a step-up. Assuming a higher return is not a lever — it changes the spreadsheet, not the outcome.
Does the calculator account for taxes and fund costs?
No. It shows a pre-tax corpus and ignores expense ratio and exit load. Plan for a slightly larger number than the goal itself, or redeem with the tax treatment of your category in mind.
Can I use this for retirement?
For a rough single-number target, yes — enter the corpus you want in today's rupees. Retirement is really a stream of expenses over decades rather than one lump sum, so treat this as a starting estimate and use the goals and cash-flow calculator for the detail.
What is a step-up SIP and should I use one here?
A step-up SIP raises the instalment by a set percentage each year, usually in line with your salary. It lets you start lower and still reach the same target. The Step-up SIP calculator shows the effect.
How often should I revisit the plan?
Once a year, and whenever your income, the goal date or the cost changes materially. Reviewing a goal is a habit, not a one-time calculation.
Is a SIP the right vehicle for every goal?
No. Very short goals are usually kept in low-volatility options; long goals are where equity-oriented categories are typically considered. The right category depends on your horizon and risk profile — try the Risk Profiler for an indicative allocation.
Can Two Plus Two Nine help me set this up?
Yes. As an AMFI-registered Mutual Fund Distributor (ARN-171746) we help with KYC and setting up SIPs in regular plans on the FundzBazar platform, and we explain how the categories work. We are not a SEBI-registered investment adviser and do not provide investment advice.