How Much SIP Do You Need Per Month?
Work it out backward from each goal, not from a round number. ₹45 lakh for a child's education in 10 years needs about ₹20,100 a month at 12%, while a ₹5.4 crore retirement corpus in 25 years needs about ₹31,700. Most people instead pick ₹5,000, ₹10,000 or ₹25,000 because it feels right, which is better than nothing but tells you little about whether you'll reach the goal.
The right approach: start with the goal, then calculate backward.
The Reverse SIP Formula
For any financial goal, you need three numbers:
- Target amount (how much you need, adjusted for inflation)
- Time horizon (how many years until you need the money)
- Expected return (based on your fund category)
The formula:
Monthly SIP = Target Amount × r / [((1+r)^n - 1) × (1+r)]
Where r = monthly return rate, (1 + annual return)^(1/12) - 1, n = total months, and each SIP is invested at the start of the month.
Real Examples
| Goal | Amount Needed (Today) | Inflated Amount (6%) | Years | Expected Return | Monthly SIP |
|---|---|---|---|---|---|
| Child's Education | ₹25 lakh | ₹45 lakh (10y) | 10 | 12% | ₹20,100 |
| House Down Payment | ₹20 lakh | ₹27 lakh (5y) | 5 | 10% | ₹35,000 |
| Retirement Corpus | ₹1.25 Cr | ₹5.4 Cr (25y) | 25 | 12% | ₹31,700 |
| World Tour | ₹5 lakh | ₹6.7 lakh (5y) | 5 | 10% | ₹8,700 |
| Car Purchase | ₹10 lakh | ₹11.9 lakh (3y) | 3 | 8% | ₹30,000 |
Notice how the required SIP varies dramatically based on time horizon. The retirement goal needs ₹5.4 Cr but only about ₹31,700/month because you have 25 years of compounding. The car needs only ₹11.9 lakh but requires ₹30,000/month because 3 years isn't enough for compounding to work.
The Inflation Adjustment Most People Skip
If your child's education costs ₹25 lakh today but they'll go to college in 10 years, you don't need ₹25 lakh. You need ₹54 lakh (at 8% education inflation). Planning with today's costs is a common reason people fall short of their goals.
Always inflate your goal amount before calculating the SIP.
What Return Should You Assume?
These are planning assumptions, not forecasts. Stay at or below them:
| Fund Category | Conservative Estimate | Don't Assume More Than |
|---|---|---|
| Large Cap / Index | 10-11% | 12% |
| Flexi Cap | 11-12% | 13% |
| Mid Cap | 13-14% | 15% |
| Small Cap | 14-15% | 16% |
| Debt Fund | 6-7% | 8% |
Using inflated return expectations means you'll save less than needed. It's better to over-save slightly and have a surplus than to under-save and scramble at the end.
Why Each Goal Needs Its Own SIP
Don't run one ₹30,000 SIP and mentally assign it to "everything." Instead:
- ₹20,100 in Fund A → mapped to "Child Education"
- ₹8,700 in Fund B → mapped to "World Tour"
- ₹31,700 in Fund C → mapped to "Retirement"
Why? Because each goal has a different time horizon, which means a different fund category. Your retirement SIP (25 years) can be in a mid cap or small cap fund. Your car SIP (3 years) should be in a debt or balanced advantage fund. Mixing them in one fund means the wrong risk level for at least one goal.
When ₹5,000/Month Is All You Have
If you can only afford ₹5,000/month, don't feel discouraged. If you aren't sure what you can afford, start from your budget: the 50/30/20 budget rule puts 20% of take-home pay into savings, which is about ₹18,400 a month on a ₹12 lakh CTC. Here's what to do with a smaller amount:
- Prioritise one goal: Start with the most important one (usually emergency fund → retirement → other goals)
- Use step-up SIP: Increase your SIP by ₹500-1,000 every year as your income grows
- ₹5,000/month at 12% for 25 years = about ₹85 lakh, most of the way to ₹1 Cr
How FinPlann Works Out Your SIP per Goal
In FinPlann, you add goals with target amounts and timelines. The planner automatically inflation-adjusts, calculates the required SIP per goal, compares it with your existing SIPs, and shows the gap. The Goal-wise Investment Plan then works out the monthly amount for each goal. Choosing the funds is up to you, or a SEBI-registered investment adviser.
Run your numbers: for retirement specifically, the retirement calculator works backwards from your target corpus to the SIP you need.
