As we all know, SIP gives investors the opportunity to spend small amounts of cash in a systematic order instead of depositing hefty amounts in one go. Investments here are done either weekly, quarterly, or on a monthly basis. Depending on what the Net Asset Value is, the unit numbers are allocated to all investors. To know more about SIP interests and how they can be calculated, please keep reading this post.
How can you calculate SIPs?
SIP is an excellent method to make the right investments or create more wealth and opportunities in the long haul. So, if you want to understand how such funds work and perform within markets, it is important that you calculate the return for your mutual fund, which actually can be done with the help of a mutual fund sip calculator.
But, SIP rates are usually fixed as investments happen to be instruments that are market rate, which rate always fluctuates from one time to another. Using a SIP calculator, you could calculate the wealth that is gained from the usual investments.
If you want to evaluate SIP scheme performances, there are various ways that investors can use to calculate investment return rates. Apart from that, you can follow some of the points mentioned here to calculate the return rates.
The Absolute Return Method
This method will allow you to calculate simple returns on initial investments. If you want to calculate absolute returns, one has to simply calculate the present along with the initial or the ending NAV for that specific scheme. You can calculate the absolute returns quite easily. So, if you think that the NAV of your investment is 20 rupees after approximately it becomes 3 years, the full return to 100%. You can use this formula to calculate all the returns within a period of a year.
Compounded Annual Growth Rate
If your time period crosses one year, then the compounded annual growth rate will easily help you calculate the returns. CAGR is usually a number that also depicts the investment growth rates and how they could be generated to assure steady returns. But, in truth, the returns also depend from one year to another. That’s why CAGR displays a mean sort of annual growth rate which will also equalize volatility and promise returns over a good time frame. To make such calculations, you can use the RD calculator or the MF calculator. They are quite useful.
Contrary to hefty investments, SIPs are a much better option as the amounts that you invest are only done once a month, which means that barely have any negative effects at all. Not just that, SIP also gives you immense flexibility as one creates, cancels, or updates at any time. When you compare the return rates of the SIP, you may always choose beneficial schemes per your choice.
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