₹10,000 SIP creates ₹87 lakh on paper, ₹32 lakh in reality: 3 problems most SIP calculations miss

The report says that a ₹10,000 monthly SIP "which feels affordable today, would have been out of reach for most investors 20 years ago." The reason is that ₹10,000 is roughly 55% of an average Indian's monthly per-capita net national income today, but 20 years ago the same amount was more than 350%.

In other words, a person earning an average income in 2006 simply could not have set aside ₹10,000 a month without it consuming most of his earnings.

When the report adjusts the SIP amount to what an average person could actually afford at different points in time, holding affordability constant at 54.7% of per-capita NNI, the SIP amount starts at ₹1,536 per month in 2006 and rises to ₹10,000 by 2026. The total invested over 20 years drops from ₹24 lakh to ₹12.2 lakh. The terminal corpus drops from ₹87.3 lakh to ₹31.9 lakh. That is a gap of ₹55.4 lakh, or 63%, between what the flat SIP projection shows and what an affordability-adjusted SIP would have actually produced.

The report identifies what it calls "SIP stoppage risk," which plays out when an investor temporarily halts his SIP during a market downturn. The data shows that stopping the SIP during the Global Financial Crisis of 2008-09 reduces the final corpus from ₹87.3 lakh to ₹77 lakh. Stopping during the Eurozone crisis of 2011-12 brings it down to ₹80.5 lakh. Stopping during the taper tantrum of 2013-14 reduces it to ₹82.3 lakh. Stopping during the Covid crash of 2020-21 brings it to ₹84.6 lakh.

The report models a scenario where the investor withdraws 50% of the corpus during a market downturn. If the withdrawal happens at the Global Financial Crisis trough, the final corpus falls to ₹75.7 lakh. If it happens at the taper trough of 2013-14, it falls to ₹61.8 lakh. If it happens at the Covid trough, the corpus drops to ₹49 lakh, nearly half of the flat projection.

The report highlights that both stoppage and withdrawal risks "tend to strike at the worst possible time, during market downturns, when job uncertainty, layoffs, and pay cuts are also elevated. That's precisely when investors face urgent cash needs, forcing them to stop their SIPs or withdraw from them, right when staying invested matters the most."

"We need luck, discipline and affordability," the report says.

The gap between the ₹87 lakh projection and the ₹32 lakh reality exists because the conventional projection assumes that an investor will contribute the same amount every month for 240 months without interruption, without withdrawal, and without their income circumstances changing. However, real life does not work that way. People lose jobs, face medical emergencies, buy homes, and pause investments when markets fall. The conventional projections do not account for any of it.

For investors building their retirement plans around SIP calculators, the takeaway is to treat the flat SIP corpus number as an upper bound, not a forecast. The actual corpus can be lower and planning for that gap may be more useful than planning for the ideal.