Find out how much you need to save each month to reach a target amount by a chosen date.
Solves the SIP maturity formula backwards, for the monthly contribution needed to hit your goal.
Monthly savings: Reverse of the SIP/annuity future value formula
The monthly savings calculator starts with a target and works backwards. You say how much you need, by when, and what return your savings can earn; it tells you how much to put aside every month. It assumes you are starting from zero.
This is the calculation behind almost every short to medium goal: a down payment on a flat, a two-wheeler bought without a loan, a wedding, a foreign trip or a gadget. Instead of saving 'whatever is left', you get a specific monthly figure that can become a standing instruction or a recurring deposit.
The result also shows how much the return helps. At a low return, almost the whole goal must come from your own savings.
1. Note the target amount G, the time T in years and the expected annual return R%.
2. Find the monthly rate i = R ÷ 1200 and the number of months n = 12T.
3. Compute the SIP factor for a deposit at the start of each month: F = ((1 + i)ⁿ − 1) ÷ i × (1 + i).
4. Divide: monthly saving = G ÷ F.
5. If R is zero, the saving is simply G ÷ n.
6. Multiply the monthly saving by n to see how much of the goal comes from your own money.
The future value of monthly deposits P made at the start of each month is FV = P × F, where F is the SIP factor. Here the future value is known, the goal G, and the payment is unknown, so P = G ÷ F. Nothing new is assumed: it is the same compounding as a SIP, used in reverse. The factor F is always at least n, the number of months, when the return is zero or positive. So the monthly saving is at most G ÷ n, and a higher return reduces it.
Over two or three years, returns do only a little of the work. Saving for 3 years at 7%, the monthly amount is roughly 10% lower than at 0%. Over 15 years at the same rate, it is more than 40% lower. So for short goals, the monthly figure is driven mostly by the target and the time, and the safety of the money matters more than squeezing out extra return. Longer goals benefit much more from a higher return, but also face more risk.
The return should be what the savings will actually earn. For a goal two years away, that usually means a recurring deposit or a savings product, not an equity fund, because a market fall just before the goal date could leave you short with no time to recover. For longer goals, a higher rate may be reasonable. Also remember that tax on interest reduces the effective return, and that the goal amount itself may rise with prices if it is far away.
Priyanka wants ₹8,00,000 in 4 years for the down payment on a flat and plans to save monthly in a recurring deposit and debt fund mix earning about 7%.
Answer: Required monthly savings ₹14,406
Using an equity return for a goal only two or three years away.
Setting the target at today's price for a purchase several years ahead.
Using this when you already have savings towards the goal; the Savings Goal calculator handles that.
Ignoring tax on interest, which reduces the effective return.
Saving irregularly and expecting to reach the goal on time.
Planning a down payment, vehicle or wedding fund.
Setting the amount for a recurring deposit or standing instruction.
Deciding whether a goal date is realistic for your budget.
Teaching students or young earners how to plan for a purchase.
What if I already have some savings?
This calculator assumes you are starting from zero. If you already have some savings invested, use the Savings Goal calculator instead, which takes that into account.