Planning backwards from a goal
Most calculators ask how much you’ll invest and tell you what you’ll get. For a real goal, the question is the other way round: I need this much, by then. How much do I invest every month?
That’s what this calculator answers. It’s useful for any goal with a price and a date:
- A child’s higher education or wedding
- The down payment on a home
- A car, a sabbatical or a big trip
- An emergency fund or a business you’d like to start
For retirement, use our retirement calculator, which also works out how much you’d need.
How it works
- What your goal costs today: the price if you paid for it now.
- Years until you need it: when you’ll need the money.
- Inflation you assume: how fast that cost is likely to rise each year.
- Return you assume: the yearly return you want to test for your investments.
The calculator first works out the future cost:
Future cost = today’s cost × (1 + inflation)ʸᵉᵃʳˢ
Then it finds the monthly SIP that would grow to that amount:
SIP = future cost ÷ [((1 + i)ⁿ − 1) ÷ i × (1 + i)]
where i is the monthly rate equivalent to your yearly return and n is the number of months. It also shows the one-time amount you could invest today instead.
A worked example
You want to fund a degree that costs ₹20 lakh today, in 12 years. You assume 6% inflation and a 12% yearly return.
| Item | Amount |
|---|---|
| Cost in 12 years, after inflation | ₹40,24,393 |
| Monthly SIP needed | about ₹13,100 |
| Or, a one-time investment today | ₹10,32,961 |
Notice how inflation doubles the target. Planning for ₹20 lakh would leave you about half way there.
Tips for goal-based investing
- One goal, one plan. Track each goal separately, so you always know how far along you are.
- Shift to safety as the date gets close. Two or three years before you need the money, start moving it from equity into steadier debt funds, so a market fall at the wrong time doesn’t derail the goal.
- Use a step-up SIP. If the monthly SIP looks steep, start lower and raise it every year. Try the step-up SIP calculator.
- Check how much prices could rise. The inflation calculator shows what today’s costs could look like in the future.
With Bridgit, your expert builds a portfolio for each goal and adjusts the mix as the goal gets closer, always with your yes.
