Goal calculator vs years to goal: SIP needed or time needed

Two questions about the same goal

A goal is an amount with a date: a house down payment in seven years, a course in four, a car in three. There are two ways to plan for one. Either you fix the date and ask how much to invest, or you fix what you can invest and ask when you will get there. WealthTicker has a calculator for each, and they are built on the same arithmetic.

• The goal planning calculator answers "what SIP does this need?"
• The years to goal calculator answers "when does this plan get there?"

Both raise the goal's cost with inflation while you save. Ignoring that is the most common reason a goal plan comes up short, and goal-based investing explains why the date and the amount have to be set together.

The goal planning calculator

It shows three results: Target in future money, with a note such as "₹10.00L today, 10y of 6% inflation", Monthly SIP needed, and Or lumpsum today. The SIP and the lumpsum are two routes to the same target, not two parts of one plan. A chart, How the goal's cost rises, plots the target year by year.

At the defaults the target becomes ₹17.91 lakh, the SIP is ₹7.71K a month and the lumpsum is ₹5.43 lakh.

Worked example: ₹20 lakh in seven years

Enter ₹20,00,000, 7 years, 12% and 6%:

The target does not change when you add savings; only the SIP does. With ₹2 lakh already saved, a line under the results says it grows to ₹4.61 lakh by then, so the SIP only has to build ₹25.46 lakh.

The 12% default is an equity-style figure. For a goal three years away or less, money usually sits in debt or liquid funds, and a return of 6–7% is more realistic. Seven years is in between, which is why it is worth running the same goal at 9% or 10% as well.

The years to goal calculator

The results are Time to reach the goal in years and months, What it will cost by then and What you will have. The chart, Where the two curves meet, draws your money rising at the expected return and the cost rising at inflation, and marks "Goal met" where they cross.

At the defaults the answer is 5y 7m. By then the goal costs ₹27.69 lakh and the corpus is ₹27.83 lakh.

Worked example: what does ₹15,000 a month do?

Keep ₹20 lakh and ₹2 lakh already invested, and change the monthly amount and step-up:

Cutting the monthly amount by 40% stretches the wait by more than three years, and the goal costs ₹5.61 lakh more by the time you arrive. A 10% yearly step-up on the smaller amount wins back almost two of those years. The page notes that a step-up usually shortens the answer more than a small change in the return assumption does.

The return still matters. At ₹25,000 a month, 8% instead of 12% gives 6y 7m, and 6% gives 7y 4m.

The two pages agree

Take the SIP from the first example, ₹22,786 a month for a ₹20 lakh goal in seven years, and enter it in the years-to-goal calculator with nothing already invested. The answer is 7y 0m. That is the check that both pages use the same monthly compounding, with the instalment going in at the start of each month.

When the answer is "Not at these rates"

The years-to-goal calculator searches up to 50 years. If your money never catches the cost in that time, it says Not at these rates and "checked to 50 years" rather than printing a made-up date. A ₹20 lakh goal with 12% inflation, chased by ₹2,000 a month at 8%, is one such case: the cost grows faster than the money. The page lists the three things that change it: a larger monthly amount, a step-up, or a higher expected return, which in practice means more equity and more ups and downs.

What both calculators leave out

1. Uneven returns. Both assume one constant return. A fall a year before the goal date matters far more than one at the start, which is why money is usually moved to safer funds as the date nears.
2. Tax. The target and SIP are pre-tax. Gains on the final redemption are taxed, so a large goal needs a little more than the figure shown.
3. Your own inflation. Education and medical costs have risen faster than general prices. The child education calculator defaults to 10% for that reason.
4. Rounding of time. Years-to-goal moves in whole months; the goal calculator in whole years.

Related reading

For a goal priced in another currency, see study-abroad planning for a falling rupee. For a car, EMI or save and buy later compares the two routes. Smaller, regular expenses fit better in sinking funds. Inflation and your savings shows what 6% a year does to a fixed target.

Run your goal through the goal planning calculator first, then put the SIP you can actually afford into the years to goal calculator to see the date it really gives you. None of this is advice on which fund to use.