How it is calculated
SIP: FV = P × [(1 + i)n − 1] ÷ i × (1 + i) | Lumpsum: FV = P × (1 + r)n
For SIP, i is the monthly return (yearly ÷ 12 ÷ 100) and n the number of months, with each instalment at the start of the month. ₹5,000 a month for 10 years at 12% grows to about ₹11.6 lakh on ₹6 lakh invested; with a 10% yearly step-up it reaches about ₹16.9 lakh. A ₹1 lakh lumpsum at 12% for 10 years grows to about ₹3.1 lakh.
Reverse: SIP needed, return needed or time to goal
For ₹1 crore in 15 years at 12%, you need a SIP of about ₹19,819 a month, or about ₹11,516 to start with a 10% yearly step-up. As a lumpsum you would need about ₹18.3 lakh today.
Frequently asked questions
Is 12% return guaranteed?
No. It is only an assumption. Equity fund returns vary and can be negative in some years.
SIP or lumpsum?
A lumpsum is fully invested from day one but carries more timing risk; a SIP spreads purchases over months. Many people use SIP for monthly income and a lumpsum or STP for a large one-time amount.
Is tax deducted here?
No. Capital gains tax on redemption and fund expenses are not included.
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