How the goal SIP calculator works
Pick a goal preset — child's education, child's marriage, retirement, house down payment, car, or a custom goal — and the calculator fills in a starting cost, a horizon and an inflation assumption for that class of goal. Replace the cost with your own number; the presets are only starting points.
Three calculations then run. First, today's cost is inflated to the year you need it, because a goal that costs ₹25 lakh now will not cost ₹25 lakh in fifteen years. Second, the savings you have already earmarked for this goal are grown at the same assumed return, so they reduce what the SIP has to do. Third, the remaining shortfall is converted into a monthly instalment using the future value of an annuity due.
The assumed return defaults by horizon — 6.5% for goals within 3 years, 9% for 3 to 7 years, and 12% beyond 7 years — reflecting the fact that a short goal usually does not belong in equity. You can override it, and you should try a lower figure before committing to a goal that cannot be postponed.
If you plan to raise the SIP every year, enter a step-up percentage and the calculator also shows the smaller starting instalment that reaches the same target. That is often the difference between a plan you can begin this month and one you keep postponing.
Formula with variable key
Three steps: inflate, grow, then solve.
Formula
Target = C × (1 + f)^N; FV(savings) = S × (1 + R)^N; SIP = (Target − FV(savings)) ÷ ([((1 + r)^n − 1) / r] × (1 + r))
- Where:
- C
- = cost of the goal in today's rupees
- f
- = assumed annual inflation for this goal as a decimal
- N
- = years until the goal
- S
- = savings already earmarked for this goal
- R
- = assumed annual return as a decimal
- r
- = monthly rate = annual return ÷ 12 ÷ 100
- n
- = number of instalments = N × 12
If the earmarked savings already exceed the inflated target, the shortfall is zero and no SIP is required for that goal — the calculator will show it that way rather than producing a negative instalment.
Worked example in rupees
A child's undergraduate education costs ₹25,00,000 today. You need it in 15 years, you assume 10% education inflation, you have ₹5,00,000 already earmarked, and you assume a 12% return.
- Inflated target: ₹25,00,000 × (1.10)^15 ≈ ₹1,04,43,120.
- The ₹5,00,000 already saved grows to about ₹27,36,783 at 12% over 15 years.
- Shortfall to fund: about ₹77,06,338.
- Monthly SIP needed at 12% for 180 months: about ₹15,273 (₹27,49,122 invested in total).
- With a 10% annual step-up instead, you could start at about ₹8,874 a month, rising to roughly ₹33,700 in the final year.
The two SIP figures fund the same goal. The flat plan is simpler; the step-up plan is much easier to start and assumes your income rises. Choose the one you will actually keep running for fifteen years.
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.
Goal presets and their inflation assumptions
| Goal | Assumed inflation | Example (cost today, years) | Inflated target | Monthly SIP |
|---|---|---|---|---|
| Child's education | 10% | ₹25,00,000 in 15 years | ₹1,04,43,120 | ₹20,697 |
| Child's marriage | 7% | ₹20,00,000 in 18 years | ₹67,59,865 | ₹8,831 |
| Retirement | 6% | ₹1,00,00,000 in 25 years | ₹4,29,18,707 | ₹22,617 |
| House down payment | 7% | ₹20,00,000 in 7 years | ₹32,11,563 | ₹27,379 |
| Car | 6% | ₹8,00,000 in 4 years | ₹10,09,982 | ₹17,428 |
Education carries the highest inflation assumption because fees have historically risen faster than general prices. The last two rows use the lower horizon-based return (9%), which is why the instalments look large relative to the target — short goals are funded mostly by your own contributions, not by growth.
Why inflating the goal matters more than the return you assume
A goal stated in today's rupees is a goal you will miss. At 10% education inflation, a ₹25 lakh course costs over ₹1 crore in fifteen years — four times the number most parents plan around. Getting the inflation assumption roughly right matters more than arguing about whether the return should be 11% or 12%.
The honest way to use this tool is to be conservative on both sides: assume inflation a little higher than you expect and returns a little lower. If the resulting SIP is unaffordable, the options are real and limited — invest more, start earlier, extend the horizon, or reduce the goal. A calculator that flatters the plan does you no favours.
Matching the goal to the right kind of fund
- Under 3 years: capital protection matters more than growth. Debt-oriented or liquid categories, or a bank RD, are the usual choices; the default 6.5% return reflects that.
- 3 to 7 years: hybrid categories sit in between, and the 9% default reflects a mixed allocation.
- Over 7 years: equity-oriented funds are the usual choice, with the volatility that comes with them. The 12% default is an assumption for illustration, not a promise.
- Near the goal date, shifting gradually out of equity protects what you have accumulated. A 40% fall in the final year of a fifteen-year plan is not a theoretical risk.
- Keep goals in separate folios where you can. It makes the plan legible and reduces the temptation to raid one goal for another.
Tax on money redeemed for a goal
When you redeem equity-oriented fund units for the goal, gains on units held more than 12 months are long-term capital gains, taxed at 12.5% on the amount above ₹1.25 lakh in a financial year; units held for 12 months or less attract short-term capital gains tax at 20%. Units are matched first-in, first-out, so the oldest instalments are sold first.
Because the ₹1.25 lakh long-term exemption is annual, a large goal redemption in a single financial year uses it only once. Where the goal allows — fees paid in instalments over three years, for example — spreading redemptions across financial years is worth planning. Debt and hybrid schemes follow different rules; check the treatment for the category you hold before you sell.
Frequently asked questions
What is a goal SIP?
It is an ordinary SIP sized against a specific target — a fee due in twelve years, a down payment in seven — rather than a round number picked at random. The calculator works out the instalment that reaches the inflated cost of the goal.
Why does the calculator inflate my goal?
Because prices rise. A course that costs ₹25 lakh today is projected to cost about ₹1.04 crore in fifteen years at 10% education inflation. Planning against today's cost would leave you far short.
What inflation rate should I use?
The presets use 10% for education, 7% for marriage and a house, and 6% for a car, retirement and custom goals. These are assumptions, not measured rates — if you know the fee history of the institution you have in mind, use that instead.
Where does the default return come from?
It is set by horizon: 6.5% for goals within 3 years, 9% for 3 to 7 years, and 12% beyond 7 years. Short money should not sit in equity, so a lower, debt-like return is assumed for it. All three are assumptions, not promises.
Should I use a flat SIP or a step-up SIP?
A step-up lets you start smaller — about ₹8,874 instead of ₹15,273 in the worked example — but assumes your income rises enough to sustain the increases. Pick the version you are confident you will keep running.
What if the required SIP is more than I can afford?
Then something has to change: extend the horizon, reduce the goal, use a step-up so the early years are lighter, or fund part of it from an existing asset. Discovering that now is exactly what the calculator is for.
Can I use this for retirement?
You can use it for a target retirement corpus if you already know the number. For a full retirement calculation — expenses, post-retirement inflation and withdrawal rate — the goals and cash-flow calculator and the NPS calculator are more suitable.
What counts as 'already saved' for a goal?
Only money genuinely earmarked for it and left invested until then. Your emergency fund is not goal money, and neither is a balance you expect to spend on something else along the way.
Does the calculator account for taxes and costs?
No. The figures are pre-tax and ignore expense ratio and exit load. Build a small buffer into the target if the redemption is likely to fall in a single financial year.
How often should I review a goal SIP?
At least once a year, and after any large change in income or in the goal itself. Re-run the numbers with the actual corpus you have reached rather than the projected one.
What if markets fall just before the goal?
That is the main risk of funding a dated goal with equity, and it is why shifting to lower-risk categories as the date approaches matters. Build the de-risking into the plan rather than reacting when it happens.
Can Two Plus Two Nine help me set this up?
Yes. As an AMFI-registered Mutual Fund Distributor (ARN-171746) we help you complete KYC and register goal-linked SIPs in regular plans on the FundzBazar platform. We distribute schemes and explain how they work; we do not offer investment advice.