When calculating returns on a lump sum investment, your high school maths will suffice. Though, if you are investing on a regular basis, such as once a month through an SIP, high school maths may not be sufficient to solve the problem. An SIP investment is made on a set date at regular intervals. When you make the investment, you will receive a fixed number of units based on the scheme's current NAV.
You would accumulate a vast amount of units over time. As a result, determining the overall returns you have made over a time becomes challenging. This is due to the fact that each SIP instalment may have performed differently. Don't be concerned. All you need is a computer and the Excel programme to compute the return on all of your assets over time. You can use the XIRR formula to calculate the returns on your SIPs over time.
The compound interest formula is utilised by SIP investment calculators in order to determine the potential returns. The calculator makes projections about potential profits based on the frequency with which compounding is taken into account. In addition, the SIP calculator requests for the monthly amount that will be invested, the length of time that the investment will be held, and the projected rate of return on the SIP.
The online SIP lumpsum calculator will compute the maturity amount as well as the wealth gained through mutual fund investments. One can also set a target amount that corresponds to their financial goal and then reverse compute the monthly amount to be invested for the specified duration and rate of development.
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