1. What is SIP Returns Calculator?

Definition: This calculator estimates the percentage return on a Systematic Investment Plan (SIP) based on the future value and total invested amount.

Purpose: It helps investors understand their investment performance by calculating the percentage return on their SIP investments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Return — Percentage return on investment
• FV — Future value of the investment
• Total Invested — Total amount invested over time

Explanation: The formula calculates the profit (FV minus total invested) as a percentage of the total invested amount.

3. Importance of SIP Returns Calculation

Details: Calculating SIP returns helps investors evaluate investment performance, compare different investment options, and make informed financial decisions.

4. Using the Calculator

Tips: Enter the future value of your investment and the total amount you've invested. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good SIP return?
A: A good return depends on the investment period and market conditions. Historically, equity SIPs have returned 12-15% annually over long periods.

Q2: Does this calculator account for the time value of money?
A: No, this is a simple return calculation. For annualized returns considering time, use the XIRR method.

Q3: Should I include dividends in the future value?
A: Yes, the future value should include all returns (capital appreciation + dividends/interest) from the investment.

Q4: How is this different from absolute returns?
A: This is absolute return. For annualized returns, you would need to factor in the investment duration.

Q5: Can I use this for lump sum investments?
A: Yes, the formula works for both SIP and lump sum investments.