Investment calculators

Compounding does almost nothing, until it does everything

The reason long-horizon projections feel implausible is that growth is exponential while our intuition is linear. A ₹10,000 monthly SIP at 12 per cent reaches about ₹23.2 lakh after ten years. Give it another ten years and it does not double to ₹46 lakh, it reaches roughly ₹99.9 lakh. The second decade contributes more than three times what the first did, on the same monthly contribution.

The practical consequence is that time in the market matters more than the amount, at least early on. Someone investing ₹5,000 a month from age 25 ends up ahead of someone investing ₹10,000 a month from age 40, despite contributing far less in total. Starting is the decision that compounds.

Choosing between a SIP and a lumpsum

A SIP spreads your entry across many price points, so you buy more units when markets fall and fewer when they rise. This does not maximise returns — mathematically, if markets rise over your horizon, investing everything on day one wins. What a SIP does is remove the need to be right about timing, and it matches how most people actually receive money, monthly.

A lumpsum makes sense when you genuinely have a large sum available and a long horizon, such as a bonus or a maturing deposit. If deploying it all at once makes you anxious, staggering it over six to twelve months is a reasonable compromise that most investors can actually stick to.

The step-up SIP calculator covers the case that reflects real life most closely: your income rises each year, so your investment should too. Increasing a SIP by ten per cent annually has a dramatic effect over long periods, usually larger than chasing a slightly better-performing fund.

What return should you actually assume

The projection is only as honest as the rate you type in. Indian equity indices have delivered somewhere around 11 to 13 per cent annualised over long multi-decade periods, but with severe drawdowns along the way and long flat stretches. Debt funds and fixed deposits sit far lower, currently in the 6 to 7.5 per cent range. Hybrid allocations land in between.

A sensible practice is to run the calculator twice, once at an optimistic rate and once two or three percentage points lower, and plan against the lower figure. If the plan only works at 15 per cent, it is not a plan, it is a hope.

Inflation is the number most people forget

A corpus of ₹1 crore in twenty years is not ₹1 crore in today's terms. At 6 per cent inflation, it buys roughly what ₹31 lakh buys today. Every long-term goal should be set in future rupees, not current ones, which is what the inflation calculator is for.

The figure that actually matters is the real return, meaning your return minus inflation. A fixed deposit at 7 per cent against 6 per cent inflation is growing your purchasing power by about one per cent a year, before tax. After tax at a 30 per cent slab, it is losing ground. This is the arithmetic behind why long-horizon money usually needs some equity exposure.

Tax changes the result, and these tools ignore it

Every projection here is pre-tax. Equity mutual funds held over a year attract long-term capital gains tax above an annual exemption threshold, debt fund gains are added to your income and taxed at slab rates, and fixed deposit interest is taxed annually at slab rates whether or not you withdraw it. PPF, by contrast, is exempt at contribution, accrual, and withdrawal.

Because the treatment differs so much by instrument, comparing two pre-tax projections can be misleading. Tax rules also change between budgets, so confirm current provisions before relying on any comparison.