Why Do Online SIP Calculators Show Different Results?
Comparing identical inputs across Indian portals reveals gaps between brokers and mutual fund AMCs. Here is the verified mathematics behind why results diverge.
Industry Calculation Ledger
₹10,000/mo · 12% · 10YCalculators differ because some divide the annual rate by 12 (nominal), while others use the compounded annual rate (effective), and contributions may be counted at the beginning or end of each month.
| Convention | Projected Corpus | Difference |
|---|---|---|
Effective CAGR, Beginning of monthAMC Baseline Annuity due (AMC standard) | ₹22,40,359 | — |
Effective CAGR, End of month Ordinary annuity | ₹22,19,300 | -₹21,059 (-0.94%) |
Nominal R/12, Beginning of month Annuity due (Broker portal standard) | ₹23,23,391 | +₹83,032 (+3.71%) |
Nominal R/12, End of month Ordinary annuity | ₹23,00,387 | +₹60,028 (+2.68%) |
The Two Mathematical Choices That Cause the Difference
Calculators do not differ because of software errors or hidden fees. They differ because of two distinct financial conventions:
1. Rate Conversion Convention (CAGR vs APR)
When entering an annual return percentage, how is the monthly periodic rate (i) derived?
- Convention 1 — Effective Annual CAGR: Used by Indian Asset Management Companies (AMCs). Formula:
i = (1 + R)^(1/12) - 1. Compounded 12 times, this matches the entered annual rate exactly. - Convention 2 — Nominal Annual Rate (R / 12): Used by many consumer broker portals. Formula:
i = R / 12. Compounding 1% per month yields 12.68% effective annual return instead of 12.00%.
2. Cash Flow Timing (Annuity Due vs Ordinary)
When does the monthly investment get credited into the mutual fund scheme?
- Beginning of Month (Annuity Due): The installment is debited on day 1 and earns compounding interest for the full month.
- End of Month (Ordinary Annuity): The installment is assumed to arrive on the last day, earning zero return in its initial month.
The Standard ₹10,000 / 10-Year / 12% Benchmark Matrix
| Rate Convention | Timing | Effective Yield | Projected Corpus | Divergence vs Baseline |
|---|---|---|---|---|
| Effective CAGR (AMC Standard) | Beginning of month | 12.00% | ₹22,40,359 | Baseline (₹0) |
| Effective CAGR | End of month | 12.00% | ₹22,19,300 | -₹21,059 (-0.9%) |
| Nominal R / 12 (Broker Standard) | Beginning of month | 12.68% | ₹23,23,391 | +₹83,032 (+3.7%) |
| Nominal R / 12 | End of month | 12.68% | ₹23,00,387 | +₹60,028 (+2.7%) |
*All values independently derived using deterministic financial formulas without external API dependencies.
Which Calculation Should an Indian Investor Use?
For conservative financial planning, Effective Annual CAGR with Beginning of Month timing (₹22,40,359) is the standard convention used by mutual fund AMCs. It ensures that when you assume a scheme delivers 12% CAGR, you are not inadvertently modeling a 12.68% compounded return.
When cross-checking with consumer broker portals, switch the Rate Convention to Nominal (R/12) in our calculator to match their exact outputs.
Frequently Asked Questions: Why Calculators Differ
Common questions regarding SIP calculations, compounding formulas, and mutual fund conventions.
Calculators vary based on two mathematical choices: the monthly rate formula (Effective CAGR vs dividing annual return by 12) and payment timing (beginning vs end of month). For identical inputs, this divergence creates noticeable differences in final corpus estimates.
Annuity Due assumes the SIP installment is invested at the beginning of the month, earning interest for all 30 days. Ordinary Annuity assumes investment happens on the last day of the month, earning zero return in its first month.
Effective Annual CAGR with beginning of month cash flow is recommended for conservative, mathematically accurate financial goal planning, as it does not overstate returns.