Worked Example
How much corpus does a ₹25,000 monthly SIP build over 2 years at 6% CAGR?
Scenario
Couple saving for ₹6 lakh Europe trip over 2 years
Inputs
- Years
- 2
- Inflation %
- 6
- Monthly sip INR
- 25000
- Expected return %
- 6
Calculation
- 1.
Total invested over tenure
₹25,000 × 24 months → ₹6.00 L
- 2.
SIP future-value factor at given rate and tenure
[((1+r/12)^n − 1)/(r/12)] × (1+r/12) → 25.56x
- 3.
Final corpus
₹25,000 × 25.56 factor → ₹6.39 L
- 4.
Wealth multiple on contributions
₹6,38,978 ÷ ₹6,00,000 → 1.1x
Conclusion
₹25,000 SIP over 2 years builds approximately ₹0.06 crore — roughly 1× the principal invested through 6% compounding.
Tradeoffs
Assumes 6% steady CAGR; real Indian equity returns vary year-to-year. With 6% inflation, ₹0.06Cr in 2 years has purchasing power of roughly ₹0.06Cr in today's money. Step-up SIP (10% annual) typically adds 25-40% to terminal corpus.