This calculator is the next one to try once you’ve calculated how much your future spending requires for a particular goal after adjusting for inflation. It could be an SUV for you or a medical degree for your teenage daughter or just a family vacation on board after a few years. The Goal SIP calculator helps you calculate the monthly amount of SIP you need to invest in a mutual fund over the goal horizon so you can easily cover future expenses when it expires. You need to put in the future value of your goal, the period of time over which this goal should be reached, and the rate of return you expect your investment to give you. Don’t forget to add the inflation rate to your expected return; otherwise, you will find yourself in a huge deficit when you need to meet the goal. In our example, our SUV would require 12.16 lakhs four years from now with 5% inflation. Therefore, you can set the target amount as 12.16 lakhs, the time period as 4 years, and the expected return as 15%, which includes 5% inflation. The expected return is your expectations of the investment you are making and will vary for each person. If you are investing with a conservative approach in a balanced fund or a fixed income fund, you should lower your expected return compared to your expectation of a stock mutual fund. The calculator gives you a monthly SIP amount of Rs. 18,642 in our example. This is the amount you need to invest in a mutual fund through the monthly SIP where you expect to get a 15% annual return.
If you are one of those smart investors who have already started planning your life goals and have some SIPs in place, this calculator is for you. It will tell you the future value of your SIPs and you can compare it to what the inflation calculator gives you. If the future value of your SIP turns out to be more than what the inflation calculator gave you for the same goal, you are really smart! But if the future value given by the SIP calculator turns out to be lower than what the inflation calculator shows, you really need to increase your SIP now, otherwise you will be facing a deficit when it is time to meet your goal.