How to Calculate SIP Return Rates Using Tools on Online Mutual Fund Apps

Systematic Investment Plans (SIPs) have become one of the most preferred ways of investing in mutual funds, thanks to their simplicity, affordability, and potential for long-term growth. However, understanding and calculating the SIP return rate is essential for tracking your investment performance and ensuring your financial goals are on track. With the advent of technology, mutual fund apps now provide tools to calculate and track SIP return yearly, SIP monthly return, and portfolio growth.

In this article, we’ll explain how SIP return rates are calculated, how mutual fund apps simplify the process, and share tips for achieving high SIP returns.

What is an SIP return rate?

The SIP return rate is the measure of how your investment grows when invested systematically in mutual funds over time. Unlike a lump-sum investment, SIPs involve regular, periodic contributions, which makes the calculation slightly more complex. Factors that influence SIP return rates include:

• Investment duration: The longer you stay invested, the better your returns due to the power of compounding and rupee cost averaging.
• Fund selection: The performance of the mutual fund directly affects your SIP returns. Selecting a well-performing fund is critical for maximising returns.
• Market volatility: While short-term fluctuations can affect returns, SIPs reduce risk by spreading investments across market cycles.

Methods to calculate SIP returns

1. Absolute returns

• This is a straightforward way to measure the total percentage gain or loss on your investment.
• It is calculated without considering the time frame, so it’s best for short-term investments.
• Formula:
  Absolute Return = [(Current Value – Invested Amount) / Invested Amount] × 100
• For example, if you invested Rs. 1,00,000 and its current value is Rs. 1,20,000, the absolute return is:
  [(1,20,000 – 1,00,000) / 1,00,000] × 100 = 20%.

2. Annualised returns

• This method calculates the compounded growth rate per year and is ideal for comparing long-term SIP performance.
• Formula:
  Annualised Return = [(Final Value / Initial Investment) ^ (1 / No. of Years)] – 1
• For instance, if your SIP grows from Rs. 1,00,000 to Rs. 1,50,000 in three years, the annualised return is approximately 14.47%.

3. XIRR (Extended Internal Rate of Return)

• XIRR is considered the most accurate way to calculate SIP returns because it factors in multiple investments over different time periods.
• Most mutual fund apps use XIRR for displaying precise SIP return rates.

SIP return monthly vs yearly

SIP monthly return

• This helps you understand how your SIP performed over a specific month.
• It is useful for monitoring short-term market trends and evaluating immediate performance.

SIP return yearly

• Provides an overview of how your SIP performed over a year, offering insights into long-term growth.
• It is better suited for assessing your investment’s alignment with financial goals.

Both metrics are essential for a comprehensive understanding of your portfolio performance.

How mutual fund apps simplify SIP return calculations

Mutual fund apps have transformed the way investors track and manage their SIPs. Here’s how they make calculating and understanding SIP return rates easier:

1. Automated calculations

• Apps automatically calculate key metrics like absolute returns, annualised returns, and XIRR, saving you the hassle of manual computations.

2. Real-time portfolio updates

• Apps provide real-time data on your investments, enabling you to monitor SIP return rates whenever you want.

3. Built-in SIP calculators

• Most apps feature SIP calculators where you can input details like monthly investment, duration, and expected return rates to estimate potential outcomes.

4. Historical performance analysis

• Apps allow you to review historical performance data for funds, helping you identify trends and predict future returns.

How to calculate SIP returns using online mutual fund apps

Step 1: Log in to the app

• Open your preferred mutual fund app and log in to your account.

Step 2: Navigate to the SIP section

• Access your SIP portfolio to view details of your ongoing and completed investments.

Step 3: Use the SIP calculator

• Enter details like the SIP amount, duration, and expected rate of return in the calculator.

Step 4: Review calculated results

• The app will display metrics such as total investment, maturity amount, absolute returns, and XIRR.

Step 5: Track real-time performance

• Continuously monitor your portfolio’s performance to ensure your investments align with your goals.

Tips to maximise SIP returns

1. Choose the right funds

• Select funds with a strong historical performance and consistent management.

2. Invest for the long term

• SIPs are most effective over longer durations, leveraging compounding and rupee cost averaging.

3. Increase SIP contributions

• Gradually increase your SIP amount as your income grows to accelerate wealth creation.

4. Diversify your portfolio

• Balance your investments across equity, debt, and hybrid funds to reduce risk and maximise returns.

5. Use mutual fund apps effectively

• Take advantage of tools like SIP calculators, fund comparison charts, and performance trackers to make informed decisions.

Why Bajaj Finserv is the best app for SIP tracking

Comprehensive tracking tools

• Bajaj Finserv offers detailed insights into your SIP return monthly and yearly performance, helping you stay on top of your investments.

Real-time updates

• The app provides instant updates on NAV changes, fund performance, and market trends.

Personalised recommendations

• Get tailored fund suggestions based on your risk profile and financial goals to achieve high SIP returns.

User-friendly interface

• The app’s intuitive design makes it easy for both beginners and experienced investors to navigate.

Secure transactions

• With advanced encryption, Bajaj Finserv ensures your data and transactions remain safe and confidential.

Conclusion

Understanding the SIP return rate is essential for optimising your mutual fund investments and achieving your financial goals. Mutual fund apps like Bajaj Finserv have made this process effortless with tools that calculate returns, provide real-time updates, and offer personalised insights. Whether you’re tracking SIP monthly returns or planning for long-term growth with SIP return yearly, these apps empower you to make smarter investment decisions. Take charge of your financial future today—download Bajaj Finserv and simplify your SIP journey with the best tools at your fingertips.