The Viral SIP Math That Doesn’t Add Up: Expert Explains Where Investors Go Wrong.
A recent LinkedIn post by Abhishek Kumar, Sebi-registered investment adviser and founder of Sahaj Money, has sparked widespread debate online — not for revealing a secret investing trick, but for exposing how easily financial numbers can be twisted to mislead people.
Kumar asked a seemingly simple question: “How can Rs 36 lakh turn into Rs 38 lakh in 30 years even with 12% returns?” The answer, he explained, lies in a common mistake — mixing nominal (actual) values with real (inflation-adjusted) values.
The Real Problem: Mismatched Numbers
Kumar broke it down in plain terms. In the viral example, Rs 36 lakh was the total amount invested in actual rupees over 30 years. But the final corpus of Rs 38 lakh was shown after adjusting for inflation. That inconsistency made the returns appear far lower than they truly were.
“Mixing real and nominal figures is like comparing apples to oranges,” he wrote. “It looks like math, but it’s not the right math.”
By adjusting only the final value and not the invested amount, taxes, or costs for inflation, the calculation distorted reality — creating the illusion that SIPs barely beat inflation.
Inflation Misapplied
- According to Kumar, the flawed calculation made three major errors:
- The invested Rs 36 lakh was shown in actual rupees, while the final corpus was inflation-adjusted.
- Inflation was not applied to taxes, commissions, or costs.
- It exaggerated how little growth SIPs provide in real terms.
“If your investment, costs, and taxes are in nominal rupees, then your final value must also be in nominal rupees,” Kumar clarified. “You can’t mix the two and expect an accurate picture.”
How To Read SIP Returns Right
To avoid getting misled by “viral math,” Kumar advises investors to stay consistent:
Option 1: Compare everything in nominal terms (without inflation).
Option 2: Adjust every figure — contributions, fees, and returns — for inflation.
“True financial clarity means speaking one language,” he said. “Either all figures are inflation-adjusted, or none are.”
A Timely Reminder For Investors
Kumar’s post has served as a wake-up call for retail investors, reminding them that even basic-looking math can be misused. Selective inflation adjustments, he noted, can wrongly paint long-term SIPs as underperforming investments — when, in reality, equity SIPs have historically outpaced inflation comfortably.
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