How to Calculate Returns on a Systematic Investment Plan - ABC for Money

There are many ways by which one can invest their money so as to grow their wealth portfolio. Some of these include Public Provident Funds, National Savings Certificates, Fixed Deposits, and even Mutual Funds.Many of these long term investments even offer tax benefits. Of the above, mutual funds or SIPs is one of the most preferred.

A SIP is an investment plan of investing in mutual funds. SIP Investors invest a fixed amount in a particular scheme at fixed intervals, which may be weekly, monthly, or quarterly for a fixed period of time. SIP installments paid to the bank or fund house usually increase over a period of time. The amount of money likely to be obtained at the time of maturity is calculated through a SIP return calculator.

This SIP return calculator provides a realistic estimate of the potential returns from a particular SIP mutual fund scheme. SIP return calculators are usually complex in nature and take into consideration the mutual fund scheme one invested in India, the investment amount, expected rate of returns, and the frequency of investments with the specific date. All these variables together calculate the SIP returns from a mutual fund.At the time of making investments, one is provided with mutual fund units which are equivalent to the Net Asset Value (NAV) of the scheme at the time of investment. As time goes by and more investments are made, the NAV Value increases, and it gets difficult to manually track the returns since each unit would have evolved differently. However, one can manually calculate the SIP returns on a mutual fund scheme in India through the XIRR formula on excel.

Mentioned below is a brief step by step process for calculating the returns using Excel:

• Mention dates of all the SIP dates when the investment was made in one column;
• Enter the amount of investment made against each of the dates with a prefix minus sign to it on the column beside the dates. This defines the cash-flows;
• Now enter the market value of the units owned, which can be checked through the SIP statement. The value needs to be mentioned only for the date you wish to check the returns for with the value being mentioned in the same column as the SIP amount. The minus sign should be prefixed in this;
• Now use the XIRR formula where three fields need to be filled; namely, the value field (cell having SIP amount and market value), the date field (cells having return date and SIP dates), and the guess field may be left blank. Then click OK;
• The final step involves multiplying the decimal number by 100, which would provide the result of the return earned for the particular SIP on the selected date.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.