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SIP Returns Excel Calculator| SIP vs Lump Sum Returns| Systematic Investment Planning Explained - YouTube
Channel: FinCalC TV
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The calculation for number of units is very simple.
As you can see in this formula..
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SIP also known as Systematic Investment Planning.
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What is it, what are it's benefits,
and we will take a mutual fund as an example
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and calculate it's SIP returns in this video.
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So watch this video till the end,
so that you understand how SIP returns are calculated
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and if you invest in Mutual Funds via SIP,
than how your SIP returns will be calculated
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There are many benefits of investing via SIP.
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Like you become disciplined in your investment strategy.
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Because every month you allocate
a small amount towards saving via SIP
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If you have set auto-debit than
SIP works automatically for you
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Another benefit of SIP is Rupee cost averaging.
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For example, if you have Rs. 1 Lakh,
and you want to invest it for 10 months.
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So when you invest entire amount (Rs. 1 Lac) in one go,
we call it as Lumpsum investing.
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One disadvantage in this type of investing is,
if market goes down for next 5-6 months, your returns will go in negative.
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That means you can't guarantee
whether you'll get back your entire principal amount of Rs. 1 Lac.
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But in Systematic Investment Planning (SIP),
you will invest Rs. 10,000 per month,
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for next 10 months, and your entire amount
of Rs. 1 Lac will get invested.
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The advantage in this type of investing
will be the adjustment in units allocation
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during market ups and downs
since you will be investing continously.
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We will see how this works in our Excel Calculator example.
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Another benefit in SIP is, you don't have the mental pressure
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of investing the entire amount like you do in Lumpsum investing.
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SIP will be monthly based and you'll have less pressure while investing
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In Lumpsum investing, you'll feel a lot of money
is taken away from you in one go
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whereas in SIP this is not the case.
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You will also feel whether you'll get good returns after 1 year,
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whether your goal will be achieved or not and
many other questions in your mind.
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But if you do SIP and every month
a small amount is debited from your account,
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you won't think much about such questions since a very small amount
is getting debited from your account.
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There is not much psychological pressure when you invest via SIP
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And you also know that market will go up in long run.
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So let us now see how you can calculate your returns
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in SIP and Lumpsum investments using Excel Calculator.
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I am Abhilash Gupta and
I welcome you on my YouTube Channel FinCalC TV
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Subscribe to my YouTube Channel FinCalC TV
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and hit bell icon to get all latest updates on personal finance.
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So as you can see in this excel file,
I have defined some labels for SIP returns calculation.
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Here I have defined some months.
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As I said earlier, we are going to take
an example of mutual fund for 10 months period
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and see the SIP and lumpsum investment returns for that mutual fund.
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So we will put our amount for every month,
that is Rs. 10,000 in this amount column
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We will also put NAV (Net Asset value),
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which will help us to get number of units allocated for that month.
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Net Asset Value (NAV) is the price of 1 unit of a mutual fund.
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Based on the amount and NAV value, we get number of units per month.
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So we will see this in our example.
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Next we will see when we invest
same amount as Lumpsum amount (Rs. 1 Lac)
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than how the returns are calculated,
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and we are going to compare lumpsum returns with SIP returns.
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So guys the mutual fund example that we are going to take is
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HDFC index fund (sensex plan)
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Please note that I am not promoting this mutual fund in any way
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I have just taken this mutual fund as an example
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to show you'll how returns will be calculated,
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you can take any example of mutual fund of your choice
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to check and calculate your mutual fund returns.
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So as you can see we will take
1st day of every month as our example
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starting from 1st December 2019 to 1st september 2020,
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and accordingly for 1st day of every month
we are going to track NAV (Net Asset Value)
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of this mutual fund to calculate number of units allocated.
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Units calculation formula is very simple.
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As you can see Units equal to amount
divided by NAV (Net Asset Value)
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This formula will give us number of units
allocated for that month.
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We will just provide amount and NAV for every month in excel
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and units will be automatically calculated based on this formula in our excel.
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So quickly I'll enter amount of Rs. 10,000
for every month in this amount column.
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And now we will track Rate (NAV) for 1st day of every month
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starting from December 2019 to September 2020.
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So as you can see for this mutual fund example
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of HDFC index fund sensex plan,
the NAV for 1st day of December 2019 is 363.
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So this means when you invest in this mutual fund
on 1st day of December 2019
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Rate (NAV) that will apply on your investment is Rs. 363.
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And based on the formula we have seen,
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required number of units
will be allocated for that month
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So we'll put the units calculation formula over here as well.
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So we will select here amount divided by Rate (NAV)
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when we press enter we can see the number of units calculated.
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As we can see the number of units calculated is 27.54.
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So these units will be allocated in your account
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when you invest Rs. 10,000 on 1st December 2019.
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In the same way we will invest another Rs. 10,000
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on 1st January 2020 and will check the Rate (NAV) for that day.
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So as we can see on 1st January 2020, the NAV is 367.25
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for HDFC Index fund sensex plan.
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So this value we will put for the month of January 2020.
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In the same way I'll quickly enter NAV values for the remaining months
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in our 10 month period using this chart of this mutual fund.
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So as you can see I have entered Rate (NAV) values of all remaining months.
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I have taken one extra NAV value of the next month over here
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so that we can calculate our returns for this SIP period.
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So these are the NAV values for 10 months period for this mutual fund.
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Now quickly we'll apply the formula of units calculation
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using the formula we have seen previously for the remaining months.
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So as we can see we have the number of units calculated based on the formula
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To summarize, we have entered the amount of Rs. 10,000 for every month
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that we will invest and we have tracked the NAV value of this mutual fund
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considering we are investing on 1st day of every month
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And based on our formula we have calculated the number of units
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that will be allocated to us every month.
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Now we will add all these units to get total number of units.
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So as we can see, we have accumulated total units of 309.27
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in 10 months period, and after this period
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the current NAV is 338.78.
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Now if you want to sell the units of this mutual fund
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due to your requirement, then how much returns will you get?
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We will see this.
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Also, we'll quickly add all the amounts of months over here.
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So your total amount invested is Rs. 1 Lac.
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Units accumulated is 309.27 and 338.78 is the current NAV.
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So when we are going to redeem these units
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which means we will sell these units
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to get our investment money back along with returns
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we will consider current NAV of this mutual fund
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and multiply it by total number of units
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to get the total amount of our investment
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So we will quickly multiply total units
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with current NAV to get
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total amount of our investment
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we can see the total amount is displayed
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So we had invested Rs. 1 Lac
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and we are getting total amount of Rs. 1,04,775.7
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So the profit that we get is Rs. 4,775.69
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So this is the way we invest every month
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via SIP (Systematic Investment Planning)
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and our returns are calculated
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based on the current NAV and total units allocated
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We call this as disciplined investing
which is one of the benefits of SIP.
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Now we will take the example of Lumpsum investment
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in which we are going to invest entire Rs. 1 Lac
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on 1st December 2019 and check the returns
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using the current NAV value and units allocated.
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So we will enter our investment value of Rs. 1 Lac
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in the month of December 2019,
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and calculate the number of units based on the formula
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amount divided by the NAV value of December 2019
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and as we can see the units are
calculated based on this formula.
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So the total units we can see is 275.48
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in this lumpsum investment example.
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If we compare total units of lumpsum investment
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with total units of SIP investment,
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units is lumpsum investment is less
compared to units in SIP investment
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which indicates that our returns will be less
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in lumpsum investment compared to SIP investment.
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Let's quickly put the formula for selling (redeeming)
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the units of this mutual fund
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after 10 month period based on the current NAV value.
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So we multiply the number of units
with current NAV value and hit on enter
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The total amount we get for our lumpsum investment is 93327.82
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Our total amount we get after selling this mutual fund
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is less compared to the investment of Rs. 1 Lac
that we have made initially
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So the loss that we face is Rs. 6672.18
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So as we can see in this example,
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even if we put lumpsum amount in a mutual fund,
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there is no guarantee that we will get more returns
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compared to SIP investment.
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This happens because nobody knows
how market will perform in future.
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So the advantage of SIP which is Rupee cost averaging
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we have noticed in this example of SIP
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since we keep on investing our amounts
during market ups and downs.
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So in our examples we have invested lumpsum amount
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to get all units in the initial month
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and on the other hand in SIP we have invested regularly
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in every month and taken the benefit of Rupee cost averaging
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which is getting more units when market goes down
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and getting less units when market goes up.
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The investment between the middle months in SIP
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has helped us to get more units during those months
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since the NAV value was less during those months.
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So a very important lesson we get here about markets
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"WE SHOULD NEVER TRY TO TIME THE MARKET".
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Because nobody is sure when market
will go up or will come down
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So friends if you want to calculate SIP or lumpsum returns
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in any mutual funds or stocks,
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than you can calculate in this way I have explained.
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We have seen in this video how returns will be calculated
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when we invest via SIP.
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We have also seen Lumpsum investment returns
using Excel File Calculator
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This excel file calculator download link I have put in description.
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So friends I would recommend that we should
avoid investing lumpsum amount
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and choose SIP investment maximum number of times
to get good returns
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Based on this we will get the benefit of
Rupee cost averaging as well.
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Ups and downs will be always there in market.
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So if you choose to invest via SIP,
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you'll get good returns and you'll also be able to
achieve your GOALS with time.
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Please like this video,
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share this video with friends,
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comment in comments section if you have any queries.
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If you are new to my channel than please
SUBSCRIBE to my YouTube channel FinCalC TV
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and press bell icon
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See you again.
Thanks for watching :)
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