Why Do SIP Calculators Give Different Results? The Broker vs AMC Math Explained

The Discrepancy Every Investor Notices

Every Indian investor who has carefully planned an investment portfolio eventually notices a puzzling anomaly: you plug in ₹10,000 per month for 10 years at an expected 12% return into a popular broker app like Groww or Zerodha, and it outputs a projected wealth of ₹23,23,391.

Then, you visit an Asset Management Company (AMC) portal such as HDFC Mutual Fund, ICICI Prudential, or Nippon India, input the identical ₹10,000 for 10 years at 12%, and their calculator reports ₹22,40,359.

That is an unexplained difference of ₹83,032 on a simple ₹12 Lakh principal investment. Neither app tells you why. Neither explains their underlying assumptions.

Root Cause 1: Nominal Division (R/12) vs Effective Compounding (CAGR)

The core divergence stems from how each tool converts an annual percentage rate (R) into a monthly interest rate (i).

Broker apps use the simple division shortcut: i = R / 12. For 12% annual return, i = 12% / 12 = 1.0000% per month. However, when 1% monthly is compounded 12 times across a year ((1 + 0.01)^12 - 1), the actual realized annual return is 12.6825% p.a., not 12.00%. The broker calculator is unintentionally simulating a higher return rate than you asked for.

In contrast, AMC calculators apply the true Compound Annual Growth Rate (CAGR) formula: i = (1 + R)^(1/12) - 1. For a 12% annual return, the true monthly rate is approximately 0.948879%. Compounded over 12 months, this yields exactly 12.0000% annual return. This is why AMC calculations are mathematically truthful to the stated CAGR.

Root Cause 2: Cash Flow Timing (Annuity Due vs Ordinary Annuity)

The second contributing factor is when each monthly debit occurs. When an investor sets an auto-debit on the 1st or 5th of the month, that cash begins compounding immediately on day one of that month. This financial convention is known as Annuity Due.

If a tool models the contribution as occurring at the end of the month, that month's deposit earns zero return for the first 30 days. This is known as an Ordinary Annuity.

Annuity Due multiplies the entire future value by an additional factor of (1 + i). Over long horizons, this creates an additional 0.95% to 1.00% difference in accumulated wealth.

Which Number Should You Rely On?

For realistic financial goal planning, mutual fund investors should rely on the AMC Effective CAGR Annuity Due model (₹22,40,359 for ₹10k/10y/12%).

Using the broker nominal formula can lead to slight under-saving because it assumes higher effective compounding than mutual funds actually achieve over standard CAGR benchmarks.