Plan goals in future rupees
The most common goal-planning mistake is saving for today's price. A college course that costs ₹20.00 lakh today will cost far more by the time your child starts. This calculator first inflates the goal to its future cost, then works out the SIP that reaches that number.
Future cost = Today's cost × (1 + inflation)^years
Monthly SIP = (Future cost − future value of savings) ÷ [((1+i)^n − 1) ÷ i × (1+i)]Worked example
Inflation rates to use for common goals
| Goal | Inflation to assume | Why |
|---|---|---|
| Higher education | 8–10% | Fees at private colleges have risen faster than general prices. |
| Wedding, travel | 6–7% | Roughly in line with consumer inflation. |
| Car, gadgets | 4–5% | Prices rise more slowly and features improve. |
| Home down payment | 5–7% | Depends heavily on the city. |
Match the investment to the time left
For goals more than seven years away, equity funds give the best chance of beating inflation. As the goal gets within three years, start moving money into debt funds or deposits so a market fall can't derail it. A goal due within a year shouldn't be in equity at all.
Frequently asked questions
Why is the monthly SIP so high for a short goal?
With only a few years, there is little time for compounding, so most of the goal has to come from your own contributions.
Should I include my EPF or PPF in 'already saved'?
Only if that money is really meant for this goal. Retirement savings should normally stay ring-fenced for retirement.
What if I get a lump sum later, such as a bonus?
Add it to 'already saved' and recalculate. Your required SIP will drop.