How this is worked out
Compounding is interest earning interest. The balance at the end of each period becomes the amount the next period's return is calculated on, so growth accelerates even though the rate never changes:
A = P(1 + r/n)^(nt) + contributions compounded the same way
A monthly SIP is the second half of that formula. Each instalment starts compounding from the month it is invested, so your first instalment has the whole term to grow and your last has none — which is why starting early moves the answer far more than contributing more.
On this page's defaults — ₹1,00,000 to start, ₹10,000 a month, 12% a year over 25 years — the balance reaches ₹2,07,67,313. Of that, ₹31,00,000 is money you paid in and ₹1,76,67,313 is growth. The growth crosses above the contributions in year ten and never looks back.
The inflation toggle is the part that changes decisions. Indian inflation has run materially higher than in the other markets on this site, and over a twenty-year horizon that gap dominates. A nominal 12% against 5% inflation is a real return of about 6.7%, not 7% — the two do not simply subtract, because (1.12 ÷ 1.05) − 1 = 6.67%.
The page separates what you put in from what the money earned, because on a long SIP the second figure becomes the larger one and people consistently underestimate by how much. Everything is computed in your browser; nothing you type is sent anywhere.
A worked example
- Starting amount
- ₹1,00,000
- Added each month
- ₹10,000
- Return / term
- 12% a year over 25 years, compounded monthly
- Total paid in, including the start
- ₹31,00,000
- Growth on top
- ₹1,76,67,313
- Final balance
- ₹2,07,67,313
- In today’s money at 5%
- ₹61,32,645
- Purchasing power lost to inflation
- ₹1,46,34,668
The crore that is not a crore
₹10,000 a month for twenty-five years at 12% reaches ₹2,07,67,313. That is the number every SIP calculator shows and it is arithmetically correct. It is also the number that misleads people most, because it is quoted in the rupees of twenty-five years from now and spent in them too.
At 5% inflation, ₹2,07,67,313 in twenty-five years buys what ₹61,32,645 buys today. The two crore is real; two crore of today's purchasing power is not. ₹1,46,34,668 of that headline figure is inflation, not wealth.
This is not an argument against investing — the same ₹31,00,000 left in a savings account would have lost ground in real terms rather than merely gained less. It is an argument for planning in real terms. If your goal is a house or an education that will itself cost more by then, the real figure is the only one that answers the question.
Why you contributed ₹31 lakh and ended with ₹2.07 crore
Of the final balance, ₹31,00,000 is money you put in and ₹1,76,67,313 is growth. The growth is more than five times the contributions, and almost all of it accumulates in the back half of the term — growth first exceeds contributions in year ten, and the balance more than doubles in the last six years alone.
That shape is the whole argument for starting early rather than contributing more. Twelve years of ₹20,000 a month is a larger total contribution than twenty-five years of ₹10,000, and it finishes far lower, because the early instalments are the ones with time to compound.
It is also why stopping a SIP for a year or two costs more than the instalments missed. The gap removes the instalments and the compounding they would have done for the remaining term — which, early on, is most of the term.
SIP, PPF and EPF are three different things
A SIP in an equity mutual fund has no guaranteed return. The 12% this page defaults to is a planning convention, not a rate anyone owes you, and the path will not be smooth — a twenty-year average of 12% is compatible with several individual years of losses.
EPF pays a rate declared each year by EPFO and ratified by the government, held at 8.25% for a fourth consecutive year. That is a guaranteed nominal return, contributed compulsorily out of salary, and it is why the retirement calculator on this site defaults to 8.25% for India rather than the 6–7% the other markets use.
PPF pays a rate reset quarterly by the Ministry of Finance, is capped at ₹1.5 lakh a year, and is exempt-exempt-exempt: the contribution is deductible under 80C, the interest is tax-free and so is the maturity value. Its certainty is the point. Comparing a PPF rate with an assumed equity return as though they were the same kind of number is the commonest mistake on Indian personal-finance forums.
What this calculator does not model
Tax. Equity mutual fund gains are taxed on redemption, debt funds differently again, and EPF interest above a threshold is taxable in the year it accrues. A projection of gross growth is not a projection of what reaches you, and this page shows the former.
The expense ratio. A fund charging 1.5% a year against one charging 0.5% is a percentage point of compounding given away every year for twenty-five years, which on the figures above is worth tens of lakh. Use a net return if you know it.
Step-up SIPs, where the instalment rises annually with your salary. They finish materially higher than a flat SIP and this page models a flat one, so treat the answer as a floor if you intend to increase your contribution over time.
Assumptions and sources
- Compounding formula
- A = P(1 + r/n)^(nt) with contributions compounded at the contribution frequency. Verified in tools/test/finance.mjs.
- Real value after inflation
- The Fisher relation — real = (1 + nominal) ÷ (1 + inflation) − 1 — rather than a subtraction. 12% nominal at 5% inflation is a real 6.67%.
- EPF interest rate
- 8.25% declared by EPFO for FY 2025-26 and ratified by the Ministry of Labour and Employment. Held in assets/js/tax/retirement-2026.js with its source. checked 2026-09
- PPF cap and tax treatment
- ₹1.5 lakh a year, rate reset quarterly by the Ministry of Finance, exempt-exempt-exempt. Held in assets/js/tax/retirement-2026.js. checked 2026-09
- The 12% default
- A planning convention for Indian equity, not a researched or promised figure. Change it to whatever you actually expect — the page computes from what you enter.