Mutual fund calculator
Best mutual fund calculator online
Projects your potential returns
Total Value
₹77,646
Total Investment
Expected Rate of Return Per annum
Time Period
Your returns
0.0%
Invested Amount
Estimated Returns
*This amount is calculated on 12% p.a. for the span of 10 yrs.
Invested Amount
₹25,000
Estimated Returns
₹52,646
Total Amount
₹77,646
Your returns compared with Univest
Univest Elite
₹344646
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₹77646
Overview of mutual Funds
Mutual funds are one of the most popular investment vehicles that allow various individual investors and institutions to pool their funds for investment in a diversified portfolio of securities. These portfolios are managed by professional fund managers working in the financial service firms. Generally, a diversified portfolio consists of different asset classes like stocks, bonds, and commodities. This diversification is a significant advantage of investing in mutual fund schemes, allowing investors to mitigate the potential risks associated and ensuring that the overall performance remains profitable. The main reason for this efficient management is that the fund managers have extensive market knowledge and expertise in optimising the performance of the fund.
Purpose of the mutual fund calculator
There are several purposes of using a mutual fund investment calculator. Some of them are as follows:
- Estimation of returns: Investors can input their amount of investment, expected rate of return, and tenure of investment to estimate the value of their investments in the future. This estimation enables investors to foresee the potential growth of their funds in the future.
- Evaluating investment strategies: Investors tend to have varying investment strategies depending upon their risk appetite and availability of time. A mutual fund calculator proves to be beneficial as it helps them to analyse all strategies and choose the one that aligns better with their financial goals.
- Financial planning: Most investors have specific financial goals like retirement planning, buying a new house, saving for their child’s education, etc. Such scenarios often require them to have clarity regarding the amount they need to invest to accumulate wealth to achieve their financial goals. Thus, a mutual fund calculator helps in this planning to help them invest strategically.
- Encourages long-term investments: Since investors have the platform to assess all factors, the calculator demonstrates the potential for higher returns owing to the power of compounding. Thus, investors are more likely to begin investing with a long-term perspective.
Assessment of risk: Investors can explore multiple scenarios of their investment strategies and assess the impact of market volatility on their investment by adjusting the expected rate of return in the online mutual fund calculator. Thus gaining insights into the potential risks associated with their investment in mutual fund schemes.
How mutual fund calculators work
Mutual fund calculators work through an algorithm that estimates the returns depending upon the factors input while computation of returns. These factors include the amount of investment made, the estimated rate of return as well as the tenure of investment.
The returns can be estimated using the formulas mentioned further.
In the case of a lump sum or one-time investments:
FV = PV (1 + r/100)^n
Where FV refers to Future Value
PV refers to Present Value
r is the estimated rate of return
n is the tenure of investment
In the case of systematic investment plans, returns are calculated by:
FV = P [(1+i)^n-1]*(1+i)/i
Where
FV refers to the Future Value
P refers to the amount invested through SIP
i refers to the compounded rate of return
n is the tenure of investment in months
r is the expected rate of return
Advantages of using mutual funds calculator
- Free of cost: Investors can access the online mutual fund calculator for free. Moreover, one can use it as many times as required, without any usage limit or charges.
- User-friendly interface: Only a few details are required to use the mutual fund calculator, such as the amount of initial investment, the tenure of investment and the investment strategy. This makes the interface easy to use as there are no technical terms required, thus enabling all individuals to make use of it.
- Decision-making: It allows investors to estimate the potential returns they can earn from their mutual fund investments. This assists in informed investment decision-making so that individuals can align their financial goals accordingly.
- Time-saving: The best mutual fund calculators simplify the process of calculation of expected returns as they eliminate the need for extensive manual calculations required while estimating the returns.
- Comparison of multiple scenarios: Mutual fund return calculators allow investors to compare various scenarios of their investment strategies by tweaking factors like principal amount or tenure of investment, thus helping them to make appropriate choices based on their goals and convenience.
Guide to using the calculator
Now that we are aware of the benefits of the mutual fund calculator, here’s a step-by-step guide for you to use the calculator effectively.
Step 1: Open a mutual fund calculator on your mobile or laptop.
Step 2: Input the required details, the first one being the choice of investment method. There are two types of investment methods available, Systematic investment plans and lump sum investments. Investors can choose among these depending on their strategies and convenience.
Step 3: Once the investment method has been chosen, input the tenure you want to invest for, and the strategy that is convenient for you.
Step 4: Click on “Proceed/Calculate”.
By following the steps mentioned above, you can easily calculate the returns on your mutual fund investments.
Mutual fund basics
Types of Mutual Funds:
- Equity mutual funds: Equity mutual funds in India generally include stocks with the aim of capital appreciation. These funds can be further sub-categorised depending on their respective market capitalization. Even though equity mutual funds can have potentially higher returns, these are more volatile. Hence, they are best suited for risk-tolerant investors who invest with a long-term perspective.
- Debt mutual funds: Debt mutual funds usually consist of fixed-income securities like government and corporate bonds. Since debt mutual funds have lower levels of risk involved, these are suitable for risk-averse investors who desire stable returns from their investments.
- Hybrid funds: Hybrid funds are a balance between equity and debt mutual funds, thus ensuring a diversified portfolio. Owing to their ideal balance of portfolio, these are mostly preferred by investors with moderate levels of risk appetite.
- Index funds: Index funds are passively managed funds with an aim to mirror the returns of indices like the Nifty 50 or the Sensex. These funds allow investors to gain exposure to the diversified market without actively selecting stocks.
- Sectoral and thematic funds: Sectoral and thematic funds emphasise on specific sectors or themes like technology, healthcare, etc. Even though they have potentially higher returns, there are high levels of risk involved due to the focus on industry-specific criteria.
- Equity Linked Savings Scheme: Equity Linked Savings Scheme funds are tax-saving mutual funds which have a compulsory lock-in period of three years. These funds have a dual benefit of wealth creation as well as tax saving under Section 80C of the Income Tax Act,1961.
- Gilt Funds: Gilt funds refer to investments in government securities with comparatively lower levels of risk. These are preferred by risk-averse investors seeking stable returns.
- International or Global Funds: Global funds are assets outside India that offer geographical diversification to investors who seek global exposure to investment classes. However, investment in global funds must be made keeping in consideration the currency risk.
Benefits of investing in mutual funds
- Diversification: A diversified portfolio consists of different asset classes like bonds, stocks and commodities. This diversification helps the risk to be mitigated across these asset classes, thus minimising the overall risk of the portfolio. This is possible because if one asset class is underperforming, another well-performing asset class can potentially offset the losses.
- Easy Access: Mutual funds are easily accessible on all trading platforms, thus making it feasible even for beginner-level investors to start their mutual funds investment journey.
- Professional Management: The mutual fund schemes are managed by professional mutual fund managers who are skilled with expertise in dealing with complex market situations. This relieves the investors’ stress with respect to the choice of portfolio in accordance with potentially maximised returns. Thus, mutual funds are a great way to gain benefits from professional money management done by financial experts.
- Transparency: Mutual funds are transparent with all aspects of the mutual fund schemes available. Investors can access all details regarding the schemes, as well as the management styles of the fund managers. A choice can be made among fund managers following strategies of value investing, growth investing, etc.
Tips for investors
Practical tips for choosing mutual funds:
The following factors must be kept in consideration while choosing the right mutual fund scheme for you.
- Checking the asset holdings: Investors must review the assets included in the mutual fund scheme chosen to ensure that they are aligned with their investment strategies and risk appetite.
- Expense Ratios: The expense ratio indicates the cost of managing the fund. Lower expense ratios, higher returns for investors.
- Performance History: Analysing the performance of the fund in the past few years is important to check the reliability and safety of your investment.
- Fund Managers Track Record: It is crucial to check the performance of the fund manager too. This is because his expertise and knowledge can positively impact the returns of your investments.
Tax Implications: Some funds may have tax implications depending on their structure. It is advised to check these details beforehand to avoid any unanticipated costs.
Conclusion
In conclusion, mutual fund investments are one of the powerful investment avenues to help you achieve your financial goals and pave your way towards wealth accumulation. Depending on one’s financial goals, risk appetite, and the suitable tenure of investments, one can choose a mutual fund scheme that aligns with his preferences. Additionally, the availability of online mutual fund calculators has helped investors to curate personalised investment strategies, thus encouraging intelligent and rational investment decisions!
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FAQs
What is mutual fund?
How is the return on investment in mutual funds calculated?
The return on mutual fund investment can be calculated as:
For lump sum investments, the formula is
M = P x (1+R)^n
Where M refers to the maturity amount
P is the principal amount invested
r is the estimated rate of return
n is the tenure of investment
For SIP investments, the formula is
M = A [ (1 + i)n – 1] x (1 + i)/i
Where M refers to the maturity amount
A is the amount of each SIP investment
i is the estimated rate of return
n is the tenure of investment
What factors should I consider when investing in mutual funds?
What are the risks associated with mutual fund investments?