# What is the process for calculating SIP in mutual funds?

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Investing in mutual funds happens in two ways. You could either invest by making a massive investment or you could simply set up a SIP where you will be expected to make regular payments.

Regardless of whether you want to invest via lump sums, SIP, or even mixes of routes, you just need to make sure you invest in funds that will give you proper returns.

## But are you wondering how you can calculate these mutual funds?

When you are calculating the returns, it is essential that you note these investments as well as the dates. Today, we’ll find out some of the ways people calculate the returns for mutual funds using the mutual funds app.

## Absolute Returns

You can calculate the absolute returns quite easily actually. All you will require is the first NAV along with the NAV at the moment. This is a one-unit price for mutual funds. To calculate absolute returns, here’s the formula you need to apply:

Absolute Return is basically your present NAV subtracted by the first NAV and then divided by the first NAV and multiplied into 100.

This means that if your first NAV happens to be 20, your current one is 35 and you’ve been invested in this process for several months, then the returns would be approximately 75%.

## XIRR

Calculating your SIP returns is not as easy as it seems. It could in fact be quite tricky as all of your investments will stay in the investment zone for various durations. Hence, all the methods mentioned above are not the perfect fit. Hence, you require XIRR in order to calculate your returns using the Systematic Investment Plan. This is an excellent formula needed to calculate internal return rates by simply considering the flowers. For this, you will require the redemption and SIP amounts, date of investment, and redemption.

In order to do this, you will first have to make two columns. Add your investment dates in each. After this, you can add amounts towards the end. You can use the XIRR feature in order to derive the results. Select values, and add all the values next and the date. After this, you can simply convert your values by multiplying them by 100 in order to get all the terms of the percentage. You can also use a sip investment calculator in order to derive the same results.

## Simple Returns

Absolute Returns is useful if you want to calculate the returns for the investments which have stayed the course for a period of 12 months at least. However, if you wish to check the annual returns or how you have generated if you were invested in the process for a year. Having annualized returns could help you with all of it. Having absolute returns is used for calculating simple returns.

So that brings our post to an end. If you want to read more about SIP, stock trading, and investments or how to use an MF calculator, check out our other blogs.