What changes when the SIP calculator says 8% instead of 12%?
The return box on the SIP calculator is not a fund’s past return and not a promise. Eight percent and twelve percent invest the same instalment. The gap between them is the picture of an assumption, and it gets wide only when the tenure is long.
Last updated: · 3 min read
₹10,000 a month for 20 years
Bar chart comparing a 20-year SIP of ₹10,000 at an assumed 8% and at an assumed 12%.
- Assumed 8%₹59.29 lakh
- Assumed 12%₹99.91 lakh
The instalment does not change when you move the slider
A SIP calculator projects one constant annual rate, split monthly, with each instalment paid at the start of the month. Change 12 to 8 and the only thing that moves is the ending value. The amount that leaves your bank stays ₹10,000.
That is why a cheerful rate is a dangerous way to make a goal look affordable. The mandate is real. The rate is a guess you typed. If the goal only fits at 12%, the goal does not fit yet.
Ten years is a smaller gap than twenty
The same ₹10,000 for 10 years invests ₹12,00,000. At an assumed 8% the value is about ₹18,41,657. At an assumed 12% it is about ₹23,23,391. The gap is about ₹4,81,734.
Stretch the same instalment to 20 years and the gap is about ₹40,62,007, on the figures in the diagram. The extra decade does two things: you invest another ₹12,00,000, and the assumed rate has longer to compound. People quote the second effect and forget the first. Most of a long SIP corpus is still money you paid in, plus a rate you have not received.
Which number belongs on a goal you cannot miss
A school fee in year ten, or a down payment with a date, should be sized at the duller rate. If ₹18.42 lakh at 8% covers the fee, the plan survives a stretch of ordinary years. If you needed the ₹23.23 lakh at 12%, a dull decade leaves you short and the calculator will not warn you.
Twelve percent is still a useful second run. It shows what a stronger decade would add. It is not the number to hand to a school. Equity funds can also finish below 8%. The calculator has no bad-year button. Run the lower rate. That is the stress test this page can actually do.
- Same instalment, same years: only the assumption changes.
- Size a dated goal at 8%, then look at 12%.
- The screen omits tax and exit load at both rates.
Do not average 8 and 12 and call it a forecast
Ten percent sits between them, and the 10-year value of this SIP at 10% is about ₹20,65,520. That is arithmetic on the same formula, not a research view of Indian equities. Nothing on this site publishes an expected return for a scheme.
Pick the rate you would still defend if the next three years are flat. Then leave it. Changing the slider every time a factsheet updates is how the plan stops matching the mandate.
Worked example: ₹10,000 for 20 years
Start-of-month SIP formula, the one the SIP calculator uses. Both rates are assumptions. Tax is not deducted.
| Item | Figure |
|---|---|
| Instalment | ₹10,000 |
| Years | 20 |
| Invested either way | ₹24,00,000 |
| Value at an assumed 8% | ₹59,29,472 |
| Value at an assumed 12% | ₹99,91,479 |
| Gap | ₹40,62,007 |
Plan the goal against ₹59.29 lakh. Keep ₹99.91 lakh as the optimistic rerun. The ₹40.62 lakh between them is not a return you can book.
Sources
Results from FinanceChacha are estimates for planning, not financial or tax advice. Read the disclaimer.
Try the calculator
Open the calculator this guide refers to and run your own numbers.