To reach ₹10,00,000 in 5 years from ₹1,00,000 at 7% a year, save ₹11,987.75 a month. That is ₹7,19,265 of deposits, and ₹1,80,735 comes from interest.
What this calculates
Enter your goal, what you have already saved, the time you have and the return you expect. This works out the monthly deposit that gets you there, the total you deposit, the interest your savings earn, what your current savings grow to by themselves, and, for comparison, what you would save each month with no return. A chart and a table show the balance building up year by year. To see what a regular investment can grow to, use the SIP calculator.
The formula
Growth of savings
grown = saved × (1 + i)^nMonthly deposit
deposit = (goal − grown) × i ÷ ((1 + i)^n − 1)Here i is the monthly return (annual return ÷ 12 ÷ 100) and n is the number of months. At a zero return the deposit is (goal − saved) ÷ n. The deposit is rounded up to the next cent.
Worked example
When to use it, and the mistakes to avoid
Use it to plan a home deposit, a car, a wedding, a holiday, an emergency fund or any target with a date.
The mistakes that cost the most:
- Assuming a high return. If the return falls short you will miss the goal; plan on the low side.
- Ignoring inflation. A goal in years' time buys less; raise the goal to match.
- Forgetting tax and fees. The return you keep is lower than the return you earn.
- Starting late. Every year you wait raises the monthly deposit.
- Skipping the buffer. Keep an emergency fund apart from this goal.
FAQ
How much should I save each month to reach my goal?
Work out what your current savings will grow to by the date, and divide the rest across the months, allowing for the interest each deposit earns. To reach ₹10,00,000 in 5 years from ₹1,00,000 at 7%, you save ₹11,987.75 a month.
What return should I assume?
Use something you would be happy to be wrong about, on the low side. A savings account may pay 3% to 5%, a fixed deposit a little more, and an investment fund more but with no guarantee. At 0% the monthly figure is just the shortfall divided by the months.
Why is the deposit lower than dividing the goal by the months?
Because your savings earn interest. Without any return you would save ₹15,000 a month to close a ₹9,00,000 gap in 5 years; with 7% a year you save ₹11,987.75, and the interest does the rest. The calculator shows both.
What if I have already saved enough?
If your current savings grow to the goal by themselves, the monthly deposit is zero and the page says so. That happens when you start with a lot, have a long time or expect a high return.
When is each deposit made?
At the end of each month, which is the usual assumption for a regular saving. Depositing at the start of the month earns a little more interest, so the figure here is slightly on the safe side. The deposit is rounded up to the next cent so you never fall short.