SAHITOOL JOURNAL

SIP, FD and RD projections: check the assumptions before comparing

SAHITOOL Editorial · Published 2026-11-10 · Updated 2026-11-10

Learn why contribution timing, compounding and tax assumptions matter when comparing investment and deposit estimates.

A projection is a conditional calculation, not a future balance you are guaranteed to receive. Before comparing two calculators, check whether they use the same contribution timing, rate convention, compounding frequency, fees and tax assumptions. A different convention can explain a different result without either calculation being a simple arithmetic error.

SIP contributions and timing

A monthly SIP illustration usually models regular contributions and an assumed return. If ₹5,000 is contributed monthly for one year with a zero assumed return and no fees, the total is ₹60,000. At a positive assumed return, a deposit made at the start of a month earns one more model period of growth than one made at the end.

SAHITOOL’s SIP model places contributions at the start of each month and uses the entered nominal annual return divided by 12 as its monthly rate. Annual step-ups change the contribution after each 12 deposits. Market investment returns do not arrive as a smooth monthly rate, and real outcomes may be negative.

Fixed deposits and compounding

For a cumulative fixed deposit, a simplified maturity formula is principal × (1 + nominal annual rate ÷ compounding frequency) raised to the number of compounding periods. With ₹1,00,000, a 10% illustrative rate, one year and annual compounding, the model gives ₹1,10,000 before tax. This rate is an example, not a bank offer.

Changing the compounding frequency changes the effective annual growth for a nominal rate. Actual deposits may use day counts, special rules for partial periods and early-withdrawal penalties. Match these terms before comparing a bank quote with a simplified estimate.

Recurring deposits, tax and inflation

An RD model combines regular deposits with interest on balances held for different lengths of time. A contribution made earlier has more time to grow. SAHITOOL models contributions at the start of each month using an equivalent monthly rate derived from the selected compounding frequency.

A single tax percentage applied at maturity is only a simplified comparison. It does not determine when tax is due, your tax bracket, deductions or TDS. Similarly, an inflation-adjusted value uses a chosen assumption; it is not a prediction of future purchasing power.

Use projections to ask better questions and compare assumptions. Check provider terms and seek appropriate advice for decisions that depend on personal circumstances.