How to calculate returns on SIP manually?

Investing in mutual funds (MF) through SIPsis one of the best low-risk investment ideas today. It offers flexible options to invest your money at fixed intervals and generate returns. Still, you must check your returns regularly.

This helps you evaluate how your holdings perform over an investment horizon. In this article, we provide you with a simple step-by-step process to manually calculate the returns on SIP.

Calculation process

As you go on paying the SIPinstalments, you accumulate several units. This makes it tricky to enumerate the earned money.

You will use the Extended Internal Rate of Return (XIRR) concept to compute the overall returns on your investments. It helps you determine the returns for irregular cash flows (as in SIPs) distributed over a time period.

Spreadsheet software like Microsoft Excel features an in-built XIRR function to make such calculations easy.

Step 1

Open a new Microsoft Excel file on your computer. Now, assign one column for dates. Enter all the dates of SIPtransactions in this column.

Step 2

Enter all the SIPtransactions in the corresponding column. This represents the amount of money you have invested at a specific date. Since it signifies a cash outflow, you need to mark it with a negative (-) sign. As a rule of thumb, you must use a minus prefix with outflows and a plus (+) sign for your inflows.

Additional Read: Why are SIPs an Ideal Choice for the First-time Investor?

Step 3

You now have to enter the current market value of all the units that you hold. In the last row, mention the date at which you want to calculate the returns. Then, enter the total market value of each unit.

To view the exact value of the units, you must sign in to your SIPaccount. Look through the statement and find the values with their respective dates.

Step 4

Use the XIRR function in the excel sheet. Move your selection to the next blank cell and type this syntax =XIRR (values, date, guess).

For defining the value parameter, select the cell with the market value and SIPamount. Select the cells having the SIPdates and the specific return date to specify the date field. It is optional to specify the guess option. You can just use a value of 0.1.

Step 5

In the last step, you simply have to multiply the decimal value by 100. For instance, type in – ‘=XIRR (A6:A7, B6:B7)*100 and press enter. That’s it, the result displayed on the screen shows the returns on your investment via SIP on the specified date.

Additional Read: How to Top up Your SIP?

Want to see great returns? Start a SIP with Tata Capital Moneyfy!

Are you looking to invest in a mutual fund? Don’t know where to get started? Just download Tata Capital’s Moneyfy app and begin your investment journey. Explore a wide range of MFs, monitor the market and grow your wealth by investing in a suitable scheme.

You can easily start a SIPonline at the comfort of your place. Moreover, we allow you to easily compare mutual funds based on risk grade, ratings, investment horizon, category and more. So, download the app and build the foundation for your financial goals now!