SIP Returns Since Inception : How Much Would Your Investment Have Grown ?

A Systematic Investment Plan (SIP) is a convenient and simple tool for investing in mutual funds, allowing investors to contribute a fixed amount at regular intervals of time. This cost-effective way helps in creating wealth, reducing market risks, and achieving long-term financial goals.

Even a year of regular SIP payment can lead to significant gains through the power of compounding. But have you wondered how much you could have earned if you had been investing in the fund since the day of its inception? The answer might surprise you.

But before looking at a real-life example, let us learn

How To Calculate SIP Returns ?

The returns can be calculated using two widely accepted methods

• XIRR (Extended Internal Rate of Return) - This is the most accurate way to determine returns for investments that involve multiple transactions at different timelines.
• CAGR (Compounded Annual Growth Rate) - This measures the average annual return of an investment over time, assuming it grows at a steady rate.

You can also depend on online SIP calculators to get a rough estimate. However, the result they provide can not be trusted as the fail to consider factors affecting SIPs such as market fluctuations, varying SIP dates, and other external influences

How To Calculate Using XIRR ?

XIRR is a good concept to calculate investments where there are multiple transactions happening at different periods of time. It considers different scenarios while calculating returns considering timings of your investment as well as withdrawals.

XIRR can be calculated using Microsoft Excel, which has an inbuilt XIRR function to calculate annualized yield for a schedule of cash flow at irregular periods.

XIRR formula in excel = XIRR (value, dates, guess)

Steps To Calculate XIRR

Step 1- Open an Excel Sheet

Step 2- Create two columns - Name one transaction dates and another amount

Step 3- Enter SIP transaction dates in the transaction column

Step 4- Enter SIP figure with a negative sign as it is an outgoing investment

Step 5- Against the redemption date in the first column, write the redemption amount (final value of investment)

Step 6- In the box below the redemption amount, type the XIRR formula

Step 7- Hit enter to get the result XIRR

Real-Life Example of SIP Growth

To illustrate the power of SIP, let us consider an example of investing a SIP amount of Rs 10,000 per month the Canara Robeco Equity Hybrid Fund since the inception of fund. Then how much returns you will receive ?

The total investments over time would have been Rs 38.30 lakhs, delivering an XIRR of 13.90 percent. The final investment corpus would have grown to Rs 5.80 crore as of December 31, 2024. This is a perfect demonstration of the wealth-building potential of disciplined investment.

Conclusion

Investments in SIP form since the inception of a fund can lead to remarkable wealth accumulation over time. Investors invested in reaping huge financial benefits should definitely consider investing for a long-term.