Future Value/SIP Calculators Question

POSTED BY Bond Bhai ON January 9, 2013 4:22 pm COMMENTS (3)



  I was just trying out some “math” and trying to arrive at some figures. However, i got confused and not sure if was doing it right! Can you please help me out?


1. Finding a Future Value of Current Expense.


Assume that i have an expense of 2Lakhs per year, Then how much would it be considering – 


Inflation: 8%

Number of Years to Retire : 25

Present Value : -200000 (-ve so that i get a positive value in excel)


Future Value =FV(8%,25,,-200000). I get a value of 13,69,695.04. So a Expense of 2L will be 13.6L after 25 years. Is this correct?


2. Assuming i would need the above value (13.6Laks) for 10 Years, what is the corpus required? Considering


Real Rate of Return = (Rate of Return/Rate of Inflation) – 1 * 100

I Considered, Rate of Return = 10%, Inflation = 8%, so real rate of return = 1.85%


So Corpus Required = FV(185/100, 10, 13,69,695.04,,1). I got a value of 1,51,72,459.78. Around 1.5Crore. So i would need a corpus 1.5Crore then it would last me 10 years while withdrawing 13.6Lakhs per year. Is this right?


3. How much do i need to SIP to generate a corpus of 1.5Crore.

Assuming Rate of Return = 12%

Years of Investment = 25

Corpus Required = 1,51,72,459.78


Using Excel, =PMT(12%/12, 25*12, ,-1,51,72,459.78). I got a value of 8,075.41. This is the amount i need to SIP every month. Is this correct?


4. Finally, I tried to verify if this correct using the FV forumla in Excel, 

=FV(12%, 25, 8075.41*12). This is to check if can generate a Corpus of 1.5Cr assuming i SIP 8K per month of the next 25 years with a Rate of return = 12%. I got a value 1,29,20,710.52. Which is like 30Lakhs short of 1.5Cr!! 


What am i doing wrong here? Any help please! Am i even doing it right or is the whole thing a waste of time?


3 replies on this article “Future Value/SIP Calculators Question”

  1. ashalanshu says:

    Dear Govind, the original jagoinvestor book has been renamed and already purchased by you. 🙂



  2. govindtruptee says:

    Dear Sir,

    I have ordered following three books from flipkart today. I also want to buy
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    16 Personal Finance Principles Every Investor Should Know
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  3. 1. for inflation
    FV(inflation,years,0,-present value) so what you did is right

    or FV = PV*(1+inflation)^years

    2. I think this is where you made the mistake
    net return = (1+return)/(1+inflation) -1

    corpus =PV(net return, years,-FV,,1)

    3. PMT(return/12,years*12,,-corpus)

    If you send me an email I can send you a calculator where this is nicely explained

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