How to Calculate the SIP Amount You Need for a Specific Goal
Published 30 June 2026 · Investing
Kavya in Pune has a specific goal: ₹50 lakh for her daughter's engineering education in 15 years. She knows she should be investing monthly, but has no idea how much. She has been putting ₹5,000/month into a SIP and hoping it will be enough. Spoiler: at 12% CAGR for 15 years, ₹5,000/month gives ₹25.2 lakh — about half of what she needs. The problem is not the market; it is that she planned forwards instead of backwards.
The Reverse SIP Formula: Start With Your Goal
Instead of asking "how much will ₹X/month give me?", goal-based planning asks "how much do I need to invest monthly to reach ₹Y by year Z?" The formula for the required monthly SIP (PMT) given a future value target:
PMT = FV × r / ((1 + r)^n – 1)
Where FV = target corpus, r = monthly interest rate (annual rate ÷ 12), and n = number of months.
For Kavya's goal — ₹50L in 15 years at 12% p.a.:
r = 12% / 12 = 1% = 0.01. n = 15 × 12 = 180 months. (1.01)^180 ≈ 5.9958.
PMT = ₹50,00,000 × 0.01 / (5.9958 – 1) = ₹50,000 / 4.9958 = ₹10,009/month (approximately ₹10,024/month in practice after rounding conventions).
Kavya needs ₹10,024/month — not ₹5,000. She has been investing half the required amount and would have arrived at her goal with a ₹24.8 lakh shortfall. Goal-based planning caught this 15 years in advance; forward planning would have caught it at year 14.
Monthly SIP Required at 12% CAGR for Common Goals
| Goal | Corpus | 10 years | 15 years | 20 years | 25 years |
|---|---|---|---|---|---|
| Emergency corpus | ₹10L | ₹4,904 | ₹2,002 | ₹1,001 | ₹532 |
| Car / home downpayment | ₹20L | ₹9,808 | ₹4,004 | ₹2,002 | ₹1,064 |
| Child education | ₹50L | ₹24,520 | ₹10,024 | ₹5,011 | ₹2,661 |
| Retirement | ₹1 crore | ₹49,041 | ₹20,049 | ₹10,011 | ₹5,322 |
Two things are immediately clear from this table. First, starting 5 years earlier roughly halves the required monthly SIP for the same goal. The ₹1 crore retirement corpus needs ₹49,041/month over 10 years but only ₹10,011/month over 20 years. Second, staggering your goals by time horizon matters — you do not need to build all four simultaneously at the highest monthly rate.
Adjusting for Inflation in Your Goal Target
The ₹50L for Kavya's daughter's education is the current cost estimate. Engineering at a private college in Pune today costs ₹12–15L. In 15 years at 4% education inflation, that ₹12L degree costs roughly ₹21.6L. If Kavya's goal is to fund a ₹50L education in today's money, the actual future cost could be ₹89L at 4% inflation. Her required monthly SIP jumps from ₹10,024 to ₹17,840. Always inflation-adjust the goal corpus, not just the return.
Run this for your own numbers
Calculate Your Goal SIP →What Most People Get Wrong
They calculate "how much will ₹5,000/month give me in 20 years?" instead of "how much do I need to invest monthly to hit ₹X by year Y?" The difference sounds semantic but it is not. Forward planning lets you drift — you invest what feels comfortable and hope the corpus is enough. Goal-based planning holds you accountable to a specific number. If the required monthly SIP is ₹10,024 and you can only invest ₹6,000, you know immediately that you need either a higher return assumption, a longer time horizon, a lower goal, or additional income. Forward planning hides this gap until it is too late to correct.
Frequently Asked Questions
How do I calculate the monthly SIP needed to reach a financial goal?
Formula: PMT = FV × r / ((1+r)^n – 1), where FV = target corpus, r = monthly rate (annual rate / 12), n = months. For ₹1 crore in 20 years at 12% p.a.: r = 0.01, n = 240, PMT = ₹1,00,00,000 × 0.01 / ((1.01)^240 – 1) = ₹10,011/month.
How much SIP do I need to build ₹1 crore?
At 12% CAGR: ₹10,011/month for 20 years, or ₹20,584/month for 15 years, or ₹49,041/month for 10 years. The earlier you start, the lower the required monthly SIP for the same target corpus.
How do I account for inflation in SIP goal planning?
If your goal is inflation-linked (e.g., child education costing ₹30L today but ₹55L in 15 years at 4% education inflation), use the future inflation-adjusted value as your FV. For retirement: multiply today's annual expense by 25 (for a 4% withdrawal rate), then inflate by expected inflation for the years until retirement.
Is it better to invest in SIP or lump sum for a specific goal?
For near-term goals (under 3 years): lump sum in debt funds or FDs to avoid market timing risk. For medium-to-long goals (5+ years): SIP is generally preferred as it averages out market volatility through rupee cost averaging.
How do I set up goal-based SIP in India?
Most platforms (Zerodha, Groww, MF Central) allow you to label SIPs by goal. Practically: open a separate SIP for each major goal (child education, retirement, home down payment), choose appropriate fund categories for each goal's horizon, and review annually.
What is the one financial goal with a specific number and deadline that you have not yet worked backwards from to find the monthly SIP?