Investors can use an online tool called a Mutual Fund Calculator to estimate their returns and an investment’s future worth depending on a particular investment plan. An Indian mutual fund calculator can assist investors in understanding how far they’ll get their goals based on the anticipated quantity of investment, time horizon, and rate of return. Investors in mutual funds should ideally approach their investments with a goal-oriented strategy.
The three variables required by the ET Money mutual fund returns calculator are your investment amount (monthly SIP or lumpsum), your time horizon, and a rate of return that is set by your investment plan. This simplifies things for you.
How Can You Benefit from an Online Mutual Fund Return Calculator?
The following are some benefits of using a mutual fund calculator available online:
1. Simple to use: To calculate your expected return, you only need to enter three variables: the investment amount, the investment duration, and the investing method.
2. Time-saving: Calculating a lump sum return investment or SIP by hand takes a lot of effort and time. This method is made easier using an online mutual fund calculator, that offers your forecast return in a matter of seconds.
3. Fast Comparisons: It allows you to compute the return on both lumpsum and SIP investing strategies. You can make investment selections based on a comparison of the expected returns from the two approaches. Additionally, you can compare several possibilities by adjusting the money, length, and investing technique to verify your expected return.
4. Setting Realistic Goals: It provides you with an anticipated investment’s future value. The mutual fund return calculator can be used to help you set sensible financial goals. It lets you modify the length of the investment and the rate of return to suit their desired level of wealth.
5. Free to use: Using an online mutual fund calculator is completely free of charge. You can use it as often as you’d like for free.
How is the ET Money Mutual Fund Returns Calculator to be used?
Calculating mutual fund returns is easy with the help of the ET Money mutual fund calculator, which is a two-step process. A number of questions appear when you utilize an online mutual fund calculator. This might be very confusing for new investors attempting to utilize any other mutual fund returns calculator in India. Because of this, the ET Money calculator features a simplified layout that assists investors in calculating mutual fund returns in just two simple steps.
Step 1: Select Your Mode of Investment
Select the SIP computation or lump sum option from the upper-right corner.
Step 2: Enter the amount you invested.
Enter the investment strategy, the number of years you plan to hold the investment (or continue making SIP contributions), and the amount you desire to invest (or the monthly contribution, if you chose SIP).
Step 3: Decide on Your Investment Plan
Because the algorithm determines the rate of return based on the risk profile of the investment plan, selecting the strategy on the calculator eliminates the need to estimate a rate of return. For example, because they carry more risk, aggressive strategies usually yield better returns than conservative ones. By choosing Custom from the drop-down menu, you can also input a custom rate if you’d like.
Now, a bar chart showing the progress of your investment across various time periods will be displayed to you. An overview of your entire investment, total gains, and investment’s future value may be found on the right.
The summary and the chart at the bottom of the MF return calculator will automatically update as you make changes to any of the variables. On the right side of the calculator, depending on your investing approach, you’ll also find a selection of the top mutual funds. Use the “Invest Now” option if any of those funds pique your interest. You can invest in mutual funds in a matter of minutes via a lump payment or SIP.
Mutual Fund Calculation Procedure
You must be familiar with the mutual fund return calculation algorithm in order to manually compute returns. Using the ET Money mutual fund returns calculator is usually significantly quicker and simpler. This is especially true if you’re comparing returns on investments made in mutual funds through either a lump amount or a systematic investment plan (SIP).
The technique used to determine the returns on mutual funds that you may expect from your investments is useful, even if you decide to utilize the Mutual Fund Return Calculator online. These are the formulas for calculating mutual funds. You will see that the formulas differ for the two investment modes. Curious as to why? Go on reading.
| Lumpsum investment | SIP Investment |
|---|---|
| M = P x (1+R)^n | M = A [ (1 + i)n – 1] x (1 + i)/i |
| Where: M = Maturity amount P = Principal amount r = Estimated rate of return n = Holding period (in years) | Where: M = Maturity amount A = SIP contribution per period i = Rate of return n = Holding period (in months) Note: For daily/weekly SIPs, adjust i and n accordingly. |
First, the compound annual growth rate, or CAGR, is utilized in the lump sum formula, whereas the extended internal rate of return, or XIRR, is employed in the SIP formula. The rationale is that CAGR is only useful for point-to-point return calculations.
You must employ XIRR when there are many cash flows (such as in the case of SIP) because the returns on each will vary. XIRR is applicable to SIPs since it makes it easier to determine a single return percentage for all cash flows.
How Can You Use a MF Calculator?
The mutual fund market in India expanded by more than two times between 2016 and 2021. The nation is liking the opportunity to be exposed to a wide range of expertly designed portfolios. Through SIP, mutual funds even assist investors in reducing their investment efforts and promoting discipline and consistency.
Investors in mutual funds are specifically advised, “Past performance does not guarantee future returns.” Thus, investors ought to concentrate on the potential future performance of the fund. A mutual fund calculator can be useful in this situation.
You may determine how a certain variable (such as the investment amount, time horizon, and rate of return) will affect your overall gains and the value of your investment with the use of a mutual fund calculator. Take investing as an example, where your ultimate goal is to buy a house. After entering the data, you discover that your investment value is marginally less than the asking price of the house you want to buy. Modify any of the three variables based on your preferences to observe how your investment plan can adjust and reach your goal.
Consider your music system to be a mutual fund calculator. Comparable to the bass and treble dials are the investment amount, rate of return, and investment time. They serve as an output optimization tool for the music system. In a similar vein, you can manipulate the three factors that go into a mutual fund calculator to determine what mix of investment, rate of return, and holding duration will best enable you to reach your goals.
The mutual fund returns calculator allows you to compute returns for both lump sum and SIP types and compare them. For example, there can be differences in returns between investing ₹5 lakh in three years or as a lump payment. While calculating mutual fund returns with a calculator usually takes less than 30 seconds, doing so by hand can take a lot of time.
FAQ
- Can mutual funds have negative returns?
- Yes, mutual funds can experience negative returns due to market fluctuations, economic conditions, and fund-specific factors. Investors should be aware of the inherent risks.
- How many mutual fund schemes are there in India?
- The number of mutual fund schemes in India varies and changes over time. For the latest count, refer to SEBI or individual mutual fund providers.
- Can a Mutual Fund Calculator predict actual market conditions?
- No, a Mutual Fund Calculator provides estimates based on the inputs provided by the user. It cannot predict or account for actual market fluctuations, unforeseen economic events, or changes in fund performance.
- Are the results from a Mutual Fund Calculator guaranteed?
- No, the results provided by a Mutual Fund Calculator are estimates based on the information entered. Actual returns may vary due to market fluctuations, changes in expenses, and other unforeseen factors.
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