With mutual fund investors getting jittery due to heightened volatility, experts have been recommending the SIP route. SIPs allow you to invest a fixed amount in mutual funds every month irrespective of the market situation. This allows you to buy more fund units when the market falls and fewer units when it climbs and, thus, helps average out the cost of mutual funds over your investment tenure.
Calculating the returns generated by SIPs, however, can be a little complicated. Since the investments are made every month over an extended period of time, the usual metrics like point-to-point or CAGR returns are of no use. The calculation of SIP returns appears complicated as it uses the concept of time value of money but there’s a way out. The RATE function in MS Excel allows you to calculate SIP returns easily.
