How do I Calculate Returns on your SIP Investments Manually?

Considered to be one of the best investment options today, Systematic Investment Plan or SIP is of the most sought-after way of investing in mutual funds^^. If done and planned in a systematic manner it can be the best weapon to build a great wealth portfolio. SIP provides you flexible investment options- weekly, monthly, quarterly and even yearly.

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SIP Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80 C
Zero LTCG Tax
Zero LTCG Tax^ (Unlike 10% in Mutual Funds)
Disciplined & worry-free investing
Disciplined & worry-free investing

The investments are done depending upon the pre-scheduled cycles, wherein the mutual fund investment money is auto debited from the investors account. Systematic Investments Plans or SIPs are extremely flexible and give the investors a plethora of options ranging from increasing or decreasing the investment value to discontinuation of the SIPs at any given point of time.

Why SIP?


Top-Up SIP provides the investor to gradually increase the investment amount. This increases the principle amount and also aids in higher returns.

There is also an option to have a fixed or variable top up amount and the same can also be capped on a yearly basis.
It also gives you an option to decide on the timeline until which you wish to have the top up facility. Top up option needs to be specified at the very beginning and can be as low as INR.500. It is good to have a controlled and limited investment plan. However, it is equally important to increase the invested sum as per the cash flow.

2. Pause SIP

There are times when you face a cash crunch and are unable to make ends meet. SIP gives you an option to pause the SIP plans from 1-3 months. This option will give you the flexibility and freedom to take care of your issues and resume the investment plan once things are settled.

A short term cash issue should never be the reason for you to jeopardize with your long term financial planning. The only thing you need to ensure is, you should be able to come out of this situation as soon as possible.

3. Flex SIP

Most of the times investor are reluctant to invest into SIP because of the uncertainties of cash flow. You will be surprised to know that SIP provides you with an option of flex SIP that can aid you in such times. It gives you a facility to adjust the instalments as per your convenience.

Trigger based investments are also possible, where the investment amount in SIP is determined based on the market triggers like NAV of the schemes changing to a certain percentage. This way you can increase or decrease the amount on a monthly basis and still have a safe investment.

4. Perpetual SIP

While starting the SIP and at the time of signing SIP mandate, a start and end date is mentioned which is a pre decided time frame falling anywhere between 1-5 years. Post completion of this time frame, people usually do not go for renewal due to different reasons and therefore, miss the instalments which hamper their final returns in the long run.

To avoid such scenarios SIP provides you with an option to leave the end date blank which will automatically convert the SIP chosen by you into a perpetual SIP. This option will let you continue the SIP for a really long time and once you feel your goals are achieved you can stop the investment and withdraw your funds.

How to start a SIP investment?

Before you decide to start investing in the SIP it is very important for you to be well researched and prepared. Try to keep in mind the below mentioned tips to avoid any mishaps later on:

1: Set an attainable and realistic financial goal.
2: Fix a timeframe for the investment (by when you will need the money).
3: Refer to a financial consultant or take help of SIP calculator to determine the investment amount which is required to achieve the end goal.
4: Do a thorough research and then choose the plan that suits your financial goals & needs.

Once you are well versed with the aforementioned tips you can make the investment either through online money transfer from your bank or you can also provide post-dated cheques. You can also provide standing instruction to your bank through which the money will be auto debited from your bank account on the given date.  Your money is further invested into various mutual funds and the progress can be tracked on the company website.

Working of SIP

The working of SIP is similar to the mutual fund investments and the money you invest is managed by the fund management and portfolio experts who make sure you are getting good returns. In order to understand the basic workings of SIP investment it can be divided into 2 parts:

1: Effects of Compounding: In compound interest your capital and interest earned on it is calculated based on the new increased capital. The value of compound interest will increase based on the tenure. More the tenure of your investment, more the money you’ll get.

2: Average of Rupee Cost: In order to avoid the effects of fluctuation rupee value, it is advisable to invest consistently rather than making a big one time investment. This not only spreads your risk portfolio but will also give you better results.

Benefits of SIP

1: The investments options are flexible and you can choose to invest the money based on your choice and earnings. Make sure any extra income you get, you increase the investment amount in order to get good returns.

2: There is no pre mature withdrawal charges or stoppage of investment charges unlike any other investment options. You can choose to withdraw your money or stop the SIP investment at any given time as per your needs and convenience.

3: The SIP investment is a hassle free experience since all the tasks are done online. This not only saves your precious time but also provides you peace of mind.

4: In SIP investments you need not work about keeping a tab on market standards, the job is taken care by the experts and you can sit back and relax that your money is in safe hands.

Things to consider in SIP Investments

1: It is always a good idea to start the SIP investments as early as possible to get bigger and better returns. The earlier you start, the higher your returns.

2: In order to earn the most out of your SIP, always keep the investments for the longer duration. This way not only you will get better returns but will also get the benefits of compounding interest.

3: You need to keep calm and watch your money grow. Just like any other investment, SIP needs time to grow your money back and you just need to be patient.

4: Consistency is the key here. Always ensure you are not defaulting on the payments and the investment money is regularly paid.

What are the risks in SIP Investment?

With every investment there comes the risk factor and so is the case with SIP. The risk associated with SIP is different for each type of mutual fund. The mutual fund investment through SIP carries little more risk as compared to debt and balanced mutual funds.

The SIP risk depends on the chosen investment option post consideration of the risk profile, liquidity of the funds and the appetite for risk. In order to manage the risk and reduce it, fund managers and fund houses come handy. The risk for any fund can also be calculated with the help of an SIP calculator.

Risk 1. Price Risk

It is always said that investing in mutual funds is a risky business. The investment in mutual funds via SIP can go down the lane any moment and you might end up getting a lower return on your investment based on the market behaviour.

The risk associated with SIP is mainly dependent on the time period you hold it for. The longer the hold period, the lower will be your risk. Also, the profit margins on returns will increase with a higher holding period.

Risk 2. Credit Risk

The price of the bond of any company is dependent on the credit rating agency. If the rating falls, or there is any downgrade the price will drop. Once there is a price drop, overall value of that particular bond will be impacted and thus the credit risk.

Risk 3. Default Risk

Many a times, the companies do not pay out to their bond holders on time and the complete investment portfolio is impacted. This will negatively impact the investor and will also lead to a default risk.

Risk 4. Fund Management Risk

The major risk associated with SIP is that the scheme may not deliver as per the pre decided norms and underperform resulting in lower returns than expected. This will also be associated with the under performance of the fund manager.

How to Calculate SIP Investments Manually?

Given, you all must have paid a little if not much attention during your school while attending math classes; it will come in handy while calculating any return on a one-time bulk investment. But, same is not the case with SIP calculation. They are a little complex if you are investing regularly.

SIP investments are well planned and happen on regular intervals on pre decided dates. At the time of making the investments you get units which are prefixed as per the NAV value of the chosen scheme at the time of investment.

As the time passes many units are accumulated and this is the time when it becomes difficult to figure out the money that you have gathered or earned over a period of time. And, the reason behind this is every instalment would have evolved differently.

Just to make things easier, you just need to reach out to your computer system and have a very basic knowledge of working of ExcellNSE -2.16 % programmes in order to calculate the return of all the investments you made. XIRR formula comes in handy while calculating the return on your investments.

Step 1 

After opening the excel file, type all the dates of SIP in one single column, for e.g. - you started investing from March 2014 onwards and the instalment due date is every month 5th. Mention this date in one column. 

SIP Return Calcaulation

Step 2 

Post doing this; enter the amount that you are investing in SIP in the other column next to it. Let’s assume you are investing INR.1000 every month towards SIP, enter this amount with a minus (-) prefix to it. This is important as it defines the cash outflow.

SIP Return Calculation

Step 3

Now comes the next step where you need to enter the total market value of all the units you own. You just need to enter the date for which you want to check the returns along with the market value of each unit in the scheme. This needs to be entered in the same column where you entered the SIP date and amount previously.

The market value of the units can be checked after logging into your SIP account by going through your statement.  The minus sign should not be prefixed with the market value of the units as this is a cash inflow and not the outflow.

SIP Return Calculation

Step 4
Now post doing all the above mentioned steps, you need to use the XIRR function which can be used by moving the cursor to the next blank cell and then open the XIRR.

Three options will be prompted viz., to be filled- dates guess and values.

  1. For entering the value field, select the cell having SIP amount and market value.
  2. For the date’s option, select the cells having return date and SIP dates.
  3. Guess option can be left blank and press OK.

SIP Return Calculation

Step 5 

Now comes the last and the final step, you need to multiply the decimal number available by 100. The result which is prompted would reflect the return amount earned for the mentioned SIP investment, on the date you want it.

SIP Return Calculation

This is one of the easiest ways to calculate your returns manually.

+For Mutual Fund midcap category Returns & for Insurance midcap fund category Returns-
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:-
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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