How to Calculate SIP Investment Returns? - CRED
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how to calculate sip investment returns?

how to calculate sip investment returns?

sip investment and related returns are always a topic of endless discussion. with new laws and budget updates, the sip calculators are a great tool to calculate returns in no time.
February 22, 2021
5 min read
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how to calculate sip investment returns

How to Calculate SIP Investment Returns

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sip or systematic investment plan is one such product in the investment market that lets you invest depending upon your capability. it differs from traditional savings methods as it offers higher returns and the increased flexibility of investing on a monthly, weekly, or even quarterly basis. for reasons like these, sip has become one of the most favoured investment schemes for investors.

we know, you might think, what is the fuzz about the returns that sip offers? how much is the interest rate, and how to estimate the returns before investing in a sip? don’t worry. we’ve got you covered with this guide. just read on.

the need for a sip calculator

there are many clauses behind making any investment scheme a success, and it becomes tough to put all of them in pen and paper. even if done neatly, it is not everyone’s cup of tea to make time to read and understand the terminology.

and that’s when investment calculators came into the picture. with these, the number game in the investment market became more comfortable to explain. it happened with several common attributes inputs being provided for the calculator, such as principal investment amount, tenure, and expected interest rates.

estimating a sip investment

the primary reason an investor wants to put in his/her money in any investment scheme is the returns it offers despite the market risks. to get precise estimates, investors curated logical calculators such as a sip calculator in sip investments.

while the motive remains the same, the logic behind the calculation of returns differs depending upon the chosen scheme. without further delay, let’s attempt to understand the estimation process of a sip return calculator.

any mutual fund sip calculator works on the formula listed below:

m = p x ({[ 1 + i]n - 1} / 1) x (i + 1)


m = estimated return amount after tenure maturity

p = estimated amount you would invest in regular intervals of time

n = estimated number of payments that you’ll be making as an investor

i = estimated interest rate offered

it is important to note that the interest rate ‘i’ is the most volatile sip investment formula parameter. the interest rate varies or fluctuates as per market conditions and is directly related to m’s estimated returns in the above formula.

this implies that if the value of ‘i’ increases, the estimated returns will increase, and if it decreases, the estimated returns will decrease as well.


so, if you are planning to invest and see how money performs with the all-time fluctuating market, then sip might be the right pick for you. moreover, with the sip calculators being available at just a few clicks are helpful in obtaining an estimate on the returns that can help you make real-time and sound decisions.