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Future Value Calculator
Calculate the Future Value of Your Investment
Investment Details
Calculate what your current investment will grow to in the future, considering compound interest and regular contributions.
Future Value Results
Value Composition
Calculation Details
Formula:
FV = PV × (1 + r)^n + PMT × [((1 + r)^n - 1) / r]
Future Value Calculator: Complete Investment Growth Guide
The Future Value (FV) Calculator is the essential tool for projecting investment growth—answering "What will my money grow to?" given time, returns, and contributions. Unlike Present Value (which works backwards from future to today), FV works FORWARD—showing what TODAY's investment + regular contributions will become in X years @ Y% return. Critical for: retirement planning (₹10L today + ₹20k/month SIP @ 12% for 20Y = how much?), goal setting (save ₹1Cr for child's education in 15Y—need what monthly SIP?), investment comparison (FD 7% vs. mutual fund 12%—which grows more?), wealth building (₹5L lumpsum @ 15% for 10Y = ?), and financial projections (startup invested ₹2Cr, expects 25% CAGR for 5Y = exit valuation?). Formula combines TWO components: (1) Lumpsum FV: PV × (1+r)ⁿ (initial investment grows exponentially!). (2) Annuity FV: PMT × [(1+r)ⁿ - 1] / r (regular contributions compound individually!). Example: ₹1L lumpsum + ₹10k/month × 10Y @ 12% = ₹3.11L (lumpsum FV) + ₹23.2L (SIP FV) = ₹26.3L total! This calculator handles initial investment (₹0-₹50L), regular contributions (monthly/quarterly/annually), return rate (0.1-30%), time period (0.5-50Y), and compounding frequency to show precise Future Value, total invested, interest earned, and wealth multiplier—enabling goal-based planning, investment comparison, and wealth trajectory modeling!
Why FV is goal-planning's best friend: Financial goals are FUTURE needs—"₹1Cr for retirement," "₹50L for home downpayment," "₹30L for child's MBA"—but how do you GET there? FV calculator reverse-engineers the path! (1) Goal → Required FV: Need ₹1Cr in 15Y (goal!). (2) FV → Required Investment: Try ₹20k/month SIP @ 12% → FV ₹99.6L (close!). Adjust to ₹20.1k → FV ₹1Cr (perfect!). FV calculator shows whether CURRENT savings rate meets FUTURE goal—if not, adjust NOW (increase SIP OR extend timeline OR boost returns). Real-world scenario: Age 30, retire 60 (30Y), need ₹5Cr corpus. Current: ₹5L savings + ₹15k/month SIP @ 12%. FV = ₹5L × (1.12)³⁰ + ₹15k/month × FV annuity = ₹1.5Cr + ₹5.3Cr = ₹6.8Cr—EXCEEDS ₹5Cr goal by ₹1.8Cr (great!). OR if goal ₹10Cr, FV ₹6.8Cr = ₹3.2Cr shortfall—need to increase SIP to ₹22k/month OR work till 65 (35Y) to hit ₹10Cr. FV thinking = proactive planning—see future trajectory, adjust present actions, achieve goals with certainty!
Compounding's magic visualized through FV: Einstein's "8th wonder of the world"—compound interest—becomes REAL via FV calculation! Small differences in returns/time = MASSIVE FV differences! Return rate impact: ₹10k/month × 20Y. @ 8% FV = ₹59L. @ 12% = ₹99L (+68%!). @ 15% = ₹1.52Cr (+157%!!). 7% return difference (8%→15%) = 2.6× FV! Why? Higher returns compound on EVERY contribution—₹10k Year 1 @ 15% grows 16.4× by Year 20 vs. only 4.7× @ 8%. Time period impact: ₹1L lumpsum @ 12%. 10Y FV = ₹3.11L. 20Y = ₹9.65L (3.1× more, not 2×!). 30Y = ₹30L (9.6× 10Y FV!). Each additional 10Y multiplies FV by 3×—exponential growth! Starting 10Y earlier = 10× MORE wealth! Regular contributions vs. lumpsum: ₹10L today vs. ₹10k/month × 10Y (both = ₹10L invested) @ 12%. Lumpsum FV = ₹31.1L. SIP FV = ₹23.2L—lumpsum wins by ₹7.9L (34%!) due to full 10Y compounding. BUT if can't afford ₹10L lumpsum, SIP's ₹23.2L still beats ₹0! FV calculator shows: START EARLY (time > money!), BOOST RETURNS (12% vs. 8% = 68% more wealth!), and STAY INVESTED (stopping SIP Year 5 loses Year 6-10's ₹12L contribution growth!). Use FV to set realistic goals, compare strategies, and visualize compounding's exponential power!
Understanding Future Value Components & Key Concepts
Initial Investment (Lumpsum): The Head Start Advantage
Upfront capital invested TODAY (₹0-₹50L range)—gets FULL compounding period! Why lumpsum powerful: Grows for ENTIRE duration—₹1L invested Year 0 @ 12% for 20Y = ₹9.65L (9.6× wealth!). If invest same ₹1L via SIP (₹5k/month × 20Y), FV only ₹5L—lumpsum nearly 2× better due to early compounding! Examples: Retirement: Have ₹10L bonus—invest lumpsum vs. spend. @ 12% for 30Y = ₹3Cr (vs. ₹0 if spent!). Windfall deployment: ₹25L inheritance @ age 30—invest @ 12% till 60 (30Y) = ₹75L (3× wealth!). Goal planning: Need ₹1Cr in 15Y—₹19.6L lumpsum TODAY @ 12% grows to ₹1Cr (vs. ₹25k/month SIP for same FV). Key insight: Lumpsum = "time is money" personified! Every year earlier = 12-15% MORE FV (₹1L invested age 25 vs. 30 = ₹30L vs. ₹17L by 60—76% more from 5Y head start!). If have lumpsum available (bonus, ESOP, inheritance), deploy IMMEDIATELY—waiting even 1 year costs 10-15% FV!
Regular Contributions: SIP's Rupee Cost Averaging Power
Periodic investments (monthly ₹500-₹1L, quarterly, annually)—builds wealth systematically! Formula FV: PMT × [(1+r)ⁿ - 1] / r, where each contribution compounds independently. ₹10k/month × 10Y @ 12%: Month 1's ₹10k grows 3.1× by Year 10, Month 60's ₹10k grows 1.4×, Month 120's ₹10k just 1× (no growth yet!)—average growth 1.9× across all contributions = total ₹23.2L FV on ₹12L invested (₹11.2L interest!). Why SIPs work: (1) Affordability: ₹20k/month manageable vs. ₹24L lumpsum upfront (need 10Y to save that!). (2) Discipline: Auto-debit = forced saving (can't spend what's auto-invested!). (3) Rupee cost averaging: Market volatility smoothens—₹10k buys more units when NAV low, fewer when high, averages 12-13% CAGR despite 20-40% annual swings! (4) Goal alignment: Monthly income → monthly SIP = cash flow match. Contribution frequency impact: ₹1.2L/year invested. Annual: ₹1.2L × 1 = FV ₹69L. Monthly: ₹10k × 12 = FV ₹71L (+2.9%—more frequent compounds slightly better!). Use monthly for salary alignment, quarterly for business profits, annually for bonuses. Step-up SIPs: Start ₹10k, increase 10% annually (₹11k Year 2, ₹12.1k Year 3...)—FV ₹35L vs. flat ₹23.2L (+50%!) due to higher contributions compounding in later years!
Return Rate: The FV Multiplier—8% vs. 12% vs. 15%
Expected annual return (0.1-30%)—THE biggest FV driver! Examples: (1) Safe investments: FD 7%, PPF 7.1%, debt funds 8-9%—₹10k/month × 20Y @ 7% = FV ₹52L (conservative). (2) Balanced: Hybrid funds 10-11%, balanced portfolios 10-12%—@ 10% = FV ₹76L (moderate). (3) Equity: Nifty 50 historical 12.2%, large-cap funds 12-14%, index funds 11-13%—@ 12% = FV ₹99L (aggressive but realistic!). (4) High-risk: Small-caps 15-18%, startups 20-30%—@ 15% = FV ₹1.52Cr (2.9× vs. 7%!). Sensitivity: 4-5% return difference = 50-100% FV difference! ₹1L lumpsum × 20Y: @ 8% = ₹4.66L. @ 12% = ₹9.65L (+107%). @ 15% = ₹16.4L (+252%!). Conservative planning: Use 10-11% for equity (lower than Nifty 12.2% historical—builds margin!), 8-9% for balanced, 7-8% for debt. If actual 12-13%, FV surplus = early goal achievement! If plan @ 15% but actual 9-10%, massive shortfall (FV ₹16L vs. ₹8L = 50% gap!). Return rate choice: Match to asset allocation—70% equity + 30% debt = blended 70%×12% + 30%×8% = 10.8% use for FV. Don't use 15% (unrealistic sustained long-term!) unless genuinely investing 100% small-caps (risky!).
Time Period: Compounding's Exponential Accelerator
Investment duration (0.5-50 years)—FV grows EXPONENTIALLY with time! Rule of 72: Money doubles every 72/r years. @ 12%, doubles in 6 years. So 30Y = 5 doublings = 32× wealth! ₹1L → ₹2L (6Y) → ₹4L (12Y) → ₹8L (18Y) → ₹16L (24Y) → ₹32L (30Y). Each 6Y multiplies by 2×—later doublings are HUGE (₹16L→₹32L = ₹16L gain in 6Y vs. ₹1L→₹2L = only ₹1L gain first 6Y!). Early start advantage: Age 25 start vs. 35 (10Y difference), retire 60. @ 12%: 25→60 (35Y) = 52.8× wealth. 35→60 (25Y) = 17× wealth. Starting 10Y earlier = 3.1× MORE FV despite only 40% longer period—compounding non-linear! SIP + time synergy: ₹10k/month. 10Y @ 12% = FV ₹23L. 20Y = ₹99L (4.3× vs. 2× time!). 30Y = ₹3.52Cr (15.3× 10Y FV!). Each additional decade multiplies FV by 4-5× due to: (1) 10Y more contributions (₹12L extra capital), (2) Earlier contributions compound 10Y longer (₹12L Month 1-120 grows another 3.1×!). Fractional years: Calculator handles 0.5Y (6 months) to 50Y—short-term goals (2-3Y home downpayment) to ultra-long (40-50Y generational wealth). Time period flexibility = model ANY goal timeline!
Compounding Frequency: Monthly vs. Annual Impact
How often interest compounds per year—Annually (1×), Monthly (12×), Daily (365×). Why frequency matters: More frequent = faster growth! Formula: FV = PV × (1+r/m)^(n×m), where m = frequency. Example: ₹1L for 10Y @ 12%. Annual: FV = ₹1L × (1.12)¹⁰ = ₹3.11L. Monthly: FV = ₹1L × (1.01)¹²⁰ = ₹3.30L (+6.1%!). Daily: FV = ₹1L × (1 + 0.12/365)³⁶⁵⁰ = ₹3.32L (+6.8%). Difference small for short periods (10Y = ₹19k), but on large amounts + long durations significant! ₹10L × 30Y @ 12%: Annual = ₹3Cr. Daily = ₹3.64Cr (₹64L more, 21%!). When to use: Annual = stocks, mutual funds, real estate (returns not frequent). Monthly = SIPs, bank FDs, recurring deposits (most consumer finance). Daily = savings accounts (interest credited daily). Default recommendation: Use annual for simplicity if calculating equity/mutual fund growth, monthly if modeling SIP (matches contribution frequency!). Key insight: For SIPs, match contribution + compounding frequency—₹10k monthly SIP should use monthly compounding (not annual!) for accuracy. Calculator auto-adjusts formula—select frequency matching investment reality!
Wealth Multiplier & Total Interest: The Compounding Scorecard
Wealth Multiplier: FV / Total Invested = how many X your money grew! Example: Invested ₹12L (SIP), FV ₹23L → Multiplier 1.92× (nearly doubled!). Higher multiplier = better compounding efficiency. Benchmarks: 1.5-2× = decent (10Y @ 8-10%), 3-5× = good (20Y @ 10-12%), 10-20× = excellent (30Y @ 12-15%), 30-50× = exceptional (40Y @ 12-14% or 30Y @ 15%+). Total Interest: FV - Total Invested = absolute wealth created by compounding! ₹23L FV - ₹12L invested = ₹11L interest (nearly 1:1 capital:interest ratio!). Longer periods → interest dominates capital! 10Y: Interest 50% of FV. 20Y: Interest 65-70%. 30Y: Interest 75-80%! Example: ₹10k/month × 30Y @ 12% = ₹3.52Cr FV on ₹36L invested → ₹3.16Cr interest (90% of FV is returns, not contributions!). Compounding phases: Year 1-10: Capital > Interest (building base). Year 11-20: Interest catches capital (compounding kicks in!). Year 21-30: Interest >>> Capital (exponential phase—returns earn returns!). Practical use: Wealth multiplier shows "bang for buck"—if 10Y multiplier only 1.2× (20% gain), returns too low (7-8%?)—shift to equity! If 2.5× (150% gain), great (12-15% returns)—stay course! Total interest shows absolute wealth creation—₹3Cr interest on ₹36L capital = life-changing wealth from systematic investing + time!
How to Use the Future Value Calculator
- Enter Initial Investment (₹0-₹50L): Lumpsum available TODAY—bonus, ESOP, inheritance, existing savings. Enter ₹0 if starting fresh with SIP only. Lumpsum gets full compounding (powerful!). Example: ₹5L today @ 12% for 20Y = ₹48L (9.6× growth!).
- Input Regular Contribution (₹0-₹1L): Monthly/quarterly/annual investment amount. Choose ₹0 if lumpsum-only. Match to cash flow—salary → monthly SIP, business profits → quarterly. Example: ₹15k/month = ₹1.8L/year systematic wealth building!
- Set Return Rate (0.1-30%): Expected annual returns. Use 10-12% for equity funds, 8-9% for balanced, 7% for FDs/PPF. Conservative better than optimistic (if actual higher, bonus FV!). Test sensitivity @ 8%/12%/15% to see range!
- Select Time Period (0.5-50 years): Years till goal. Longer = exponentially more FV! Child's education in 15Y? Retirement in 30Y? Home downpayment in 5Y? Model exact timeline. Each extra year adds 10-15% FV (compounding!).
- Choose Compounding Frequency: Annual (default/stocks), Monthly (SIPs/FDs), Daily (savings accounts). Match investment type. For SIPs, use monthly compounding (matches contribution frequency!).
- Review Results—FV, Multiplier, Interest Breakdown: Calculator shows Future Value (goal amount), Total Invested (capital), Total Interest (compounding wealth), and Wealth Multiplier (X growth). Compare FV to goal—if ₹1Cr goal but FV ₹80L, increase SIP by 25% OR extend 3-5 years!
Practical Example: ₹5L Lumpsum + ₹20k SIP for 20 Years @ 12%—Retirement Corpus Building
Scenario: Age 35, have ₹5L savings + can invest ₹20k/month. Goal: Build retirement corpus by 55 (20 years). Expected return: 12% (equity-heavy portfolio). What will FV be?
Calculator Inputs:
- Initial Investment: ₹5,00,000 (lumpsum today)
- Regular Contribution: ₹20,000/month (₹2.4L/year)
- Return Rate: 12% p.a.
- Time Period: 20 years
- Compounding: Monthly
Results:
- Lumpsum FV: ₹5L × (1.01)²⁴⁰ = ₹5L × 9.93 = ₹49.6L (initial ₹5L grows 10× in 20Y!)
- SIP FV: ₹20k/month × 240 months @ 12% = ₹99.9L (on ₹48L invested = 2.08× multiplier!)
- Total FV: ₹49.6L + ₹99.9L = ₹1.49 Crores!
- Total Invested: ₹5L + ₹48L = ₹53L
- Total Interest: ₹1.49Cr - ₹53L = ₹96L (interest nearly 2× capital!)
- Wealth Multiplier: ₹1.49Cr / ₹53L = 2.81× (nearly tripled wealth in 20Y!)
Key Insights:
- Lumpsum's Compounding Power—₹5L→₹49.6L (10× Growth!): Initial ₹5L compounds for FULL 20 years → 10× wealth (from modest ₹5L to nearly ₹50L!). If spent that ₹5L on car/vacation, lose ₹44.6L opportunity cost! Every ₹1L lumpsum invested age 35 = ₹10L by 55 @ 12%—10× multiplier! This is why windfalls (bonus, ESOP, inheritance) should deploy to investments immediately—waiting even 5 years cuts FV by 40% (₹50L → ₹30L if invest age 40 instead of 35!).
- SIP's Systematic Wealth—₹48L Invested → ₹99.9L FV (2.08× Multiplier): ₹20k/month × 20Y = ₹48L total contributions, grows to ₹99.9L (₹51.9L interest = 108% return on capital!). Why less than lumpsum multiplier (2.08× vs. 10×)? SIP contributions spread over 20Y—Month 1's ₹20k compounds 20Y (10× growth like lumpsum!), but Month 240's ₹20k has 0Y compounding (just 1× face value!). Average across 240 contributions = 2× multiplier. But ₹99.9L FV still life-changing wealth from disciplined ₹20k/month!
- Combined Strategy Synergy—₹1.49Cr Total = Retirement Ready: Lumpsum (₹50L) + SIP (₹1Cr) = ₹1.49Cr corpus @ age 55. If retire at 55 with 4% safe withdrawal rate, can withdraw ₹5.96L/year (₹50k/month) indefinitely! Or wait till 60 (5Y more: ₹50L→₹88L, ₹1Cr→₹1.76Cr = ₹2.64Cr total!) for ₹1.05L/month retirement income. Combined lumpsum + SIP > either alone: ₹5L lumpsum-only (no SIP) = ₹50L FV. ₹20k SIP-only (no lumpsum) = ₹1Cr FV. Together = ₹1.49Cr (sum of parts!)—diversifies risk (lumpsum market-timed once, SIP averages over 20Y) + maximizes compounding (lumpsum early advantage + SIP systematic building).
- Interest Dominates Capital—₹96L Interest vs. ₹53L Invested: After 20Y compounding @ 12%, interest earned (₹96L) nearly 2× your capital (₹53L)—64% of FV is returns, not contributions! This is compounding's magic—money earns money, those earnings earn MORE money, exponentially! First 10Y: Interest ≈ capital (1:1 ratio). Second 10Y: Interest >> capital (returns on earlier returns explode!). If extend to 30Y: Interest would be 4-5× capital (₹3Cr interest on ₹80L invested!). Implication: Stay invested FULL duration—stopping Year 15 (5Y early) loses Year 16-20's compounding (₹60L+ FV gone!)—patience = wealth!
Important Note: This assumes constant 12% returns—reality involves volatility (equity -30% to +50% annual swings!), economic cycles, and life disruptions. Sensitivity: @ 10% return, FV ₹1.2Cr (-19%). @ 15%, FV ₹2.1Cr (+41%!). 3% return difference = 40-60% FV difference! Mitigation: (1) Use conservative 10-11% (not 15%), (2) Continue SIP in market crashes (buy more units cheap!), (3) Rebalance annually (book equity profits to debt), (4) Emergency fund separate (don't touch investments!), (5) Increase SIP 10% annually with salary hikes (step-up SIP → FV ₹1.9Cr vs. flat ₹1.49Cr, +28%!). FV = roadmap, not guarantee—discipline + patience + time = wealth creation!
Why Future Value Calculator Matters for Goal Planning
- Goal-Based Investing—Reverse Engineer the Path: Financial goals are FUTURE amounts (₹1Cr retirement, ₹50L home, ₹30L education)—FV calculator shows if CURRENT strategy gets there! Input existing SIP, see FV—if ₹80L but goal ₹1Cr, gap ₹20L = increase SIP 25% OR extend timeline 3Y OR boost returns 2%. Prevents "hope planning" (hoping ₹10k/month somehow reaches ₹1Cr—calculator shows reality: FV only ₹50L @ 12%/20Y!). Enables proactive adjustment—spot shortfalls EARLY (age 35 see ₹20L gap, increase SIP now vs. discover at 55 when too late!). Calculator = financial GPS—shows current trajectory, recalculates route if off-track!
- Visualizes Compounding's Exponential Power: "Compounding = 8th wonder" is ABSTRACT until you see FV numbers! ₹10k/month × 30Y @ 12% = ₹3.52Cr on ₹36L invested (10× wealth!)—that's compounding visualized! Or ₹1L lumpsum @ 12% for 30Y = ₹30L (30× growth!)—₹1L becomes ₹30L just by waiting + 12% returns. Calculator makes compounding TANGIBLE—not "money grows exponentially" (vague), but "your ₹20k/month becomes ₹1.5Cr in 20Y" (concrete!). Motivates early start—age 25 vs. 35 FV comparison shows 2-3× difference despite only 10Y gap. Discourages stopping—"pause SIP 5Y" loses ₹30-50L FV. Compounding's magic = VISIBLE via FV!
- Investment Comparison Tool—FD vs. Equity vs. Balanced: Which grows more: FD 7%, balanced 10%, or equity 12%? FV calculator answers! ₹15k/month × 20Y: @ 7% = ₹78L, @ 10% = ₹1.14Cr (+46%), @ 12% = ₹1.49Cr (+91%!). 5% return difference (7%→12%) nearly DOUBLES FV (₹78L → ₹1.49Cr = 91% more wealth!). Also compares lumpsum vs. SIP: ₹10L lumpsum @ 12%/10Y = ₹31L. ₹10k/month × 10Y (also ₹12L total) = ₹23L—lumpsum wins by ₹8L (34%) due to full 10Y compounding. Empowers rational decisions—"FD safe but FV ₹78L vs. equity ₹1.49Cr = ₹71L opportunity cost—worth 12% volatility for 91% more wealth?" You decide risk-return trade-off with DATA, not emotion!
- Adjustable Variables = Scenario Modeling: What if SIP ₹20k → ₹25k? FV ₹1.49Cr → ₹1.87Cr (+₹38L, +25%!). What if extend 20Y → 25Y? FV ₹1.49Cr → ₹2.64Cr (+₹1.15Cr, +77%!). What if returns 12% → 15%? FV ₹1.49Cr → ₹2.1Cr (+₹61L, +41%). Calculator enables rapid "what-if" analysis—tweak ONE variable (SIP amount, timeline, returns), see FV impact instantly! Informs decisions: Can't afford ₹25k SIP? Extend 3Y (costs nothing but time, adds ₹50L FV!). Can boost returns 2% (shift debt→equity)? Adds ₹30L FV! Flexibility = optimization—find YOUR optimal mix of time, capital, and returns to hit goal!
Frequently Asked Questions About Future Value
Future Value (FV): What money grows TO in the future. Formula: FV = PV × (1+r)ⁿ. Works FORWARD—"₹1L today @ 12% for 10Y = ₹3.11L future." Use for: goal planning (need what FV for retirement?), wealth projection (my ₹10k SIP becomes?), investment growth (₹5L lumpsum grows to?). Present Value (PV): What future money is worth TODAY. Formula: PV = FV / (1+r)ⁿ. Works BACKWARD—"₹10L in 10Y @ 12% = ₹3.22L today." Use for: comparing options (₹50L today vs. ₹90L in 10Y?), valuation (bond/annuity worth today?), discount analysis (settlement PV vs. headline future amount). Relationship: FV and PV are inverses! If ₹1L → ₹3.11L (FV), then ₹3.11L → ₹1L (PV) at same rate/time. Use FV for "what will I have?" questions, PV for "what's it worth today?" questions!
Lumpsum wins IF you have capital available: ₹10L today @ 12%/10Y = ₹31L FV. ₹10k/month × 10Y (also ₹12L total!) = ₹23L FV—lumpsum 34% better due to full 10Y compounding! BUT most people don't have ₹10L lumpsum—so SIP's ₹23L >> ₹0 (not investing!)। Best strategy: COMBINE both! Invest lumpsum (bonus, inheritance, existing savings) PLUS monthly SIP (from salary). Example: ₹5L lumpsum + ₹15k SIP × 20Y @ 12% = ₹50L + ₹1Cr = ₹1.5Cr total! Diversifies timing risk (lumpsum = one market entry point, SIP = 240 entry points averaged!). When lumpsum-only: Large windfall (₹50L+), short horizon (< 5Y), lumpsum required (buying house—can't SIP ₹2Cr over 2Y!). When SIP-only: No lumpsum, salaried (monthly cash flow), long horizon (15-30Y—SIP shines!). Most people: SIP primary + lumpsum opportunistic (invest bonuses/windfalls as lumpsums!).
Match return rate to ACTUAL investment asset class: (1) Equity funds/stocks: 11-13% (Nifty 50 historical 12.2%). Conservative: Use 10-11%. Aggressive: 12-13%. Don't use 15%+ (unrealistic sustained!). (2) Balanced/Hybrid: 9-11% (60% equity + 40% debt blend). Use 10% standard. (3) FDs/PPF: 7-7.5% (current rates). (4) Debt funds: 8-9%. (5) Real estate: 8-10% (appreciation, not rental yield). (6) Gold: 8-9% long-term. Conservative planning: Use 1-2% LOWER than historical average—if Nifty 12%, use 10-11% for safety. Builds margin for volatility/underperformance. If actual returns 12-13%, FV surplus = early goal achievement (good problem!). If plan @ 15% but actual 10%, massive shortfall (₹2Cr vs. ₹1.2Cr = 40% gap!). Sensitivity test: Calculate FV @ 8%, 10%, 12%, 15%—see range. If positive across all, robust! If goal only achievable @ 15%+, too risky (reduce goal OR extend timeline).
More frequent compounding = slightly higher FV! Example: ₹1L for 20Y @ 12%. Annual: FV = ₹1L × (1.12)²⁰ = ₹9.65L. Monthly: FV = ₹1L × (1.01)²⁴⁰ = ₹10.89L (+12.8%!). Daily: FV = ₹1L × (1 + 0.12/365)^7300 = ₹11.02L (+14.2%). Difference: ₹1.37L on ₹1L investment over 20Y—significant! Why? Monthly compounding = interest earned 12× per year starts earning interest sooner vs. annual (once/year). Over 20Y, this gap compounds to 12-14% FV advantage. When to use: Annual = stocks/mutual funds (NAV calculated daily but returns conceptually annual). Monthly = SIPs, FDs, RDs (matches contribution/interest frequency). Daily = savings accounts (interest credited daily). Best practice: For SIPs, use monthly compounding (conservative + matches reality!). For lumpsum equity, annual sufficient (daily vs. annual FV difference < 2% short-term, not worth complexity). Calculator handles all—just select matching investment type!
Three levers to close FV gap: (1) Increase SIP amount: If goal ₹1Cr, FV ₹80L (₹20L short)—increase SIP 25% (₹20k → ₹25k = ₹20L more FV!). Most direct solution. (2) Extend timeline: If 20Y target, extend to 23-24Y—3-4 extra years = ₹20-30L FV boost from compounding! Costs nothing but time. Works if goal flexible (retire 60 vs. 57—lifestyle difference minimal!). (3) Boost returns 1-2%: Shift asset allocation—50% equity → 70% equity = 9% → 11% return = ₹15-20L FV gain! Or switch high-expense funds (2%) to index funds (0.5%) = save 1.5%/year = ₹10L over 20Y! Combinations: Increase SIP 10-15% (manageable!) + extend 2Y + boost returns 1% = close ₹30-40L gap easily! What NOT to do: Use unrealistic 18-20% returns (risky!), stop SIP thinking "not enough anyway" (₹80L > ₹0!), or ignore gap (hoping it resolves—it won't!). Calculator shows gap early → adjust NOW while time remains!