Mutual Fund Return Calculator

What is a Mutual Fund Calculator?

A mutual fund return calculator is a web-based tool that assists investors in calculating their returns and the potential growth of an investment based on a certain investing plan. A mutual fund calculator can assist investors in understanding how far they would be able to reach their goals depending on the anticipated amount of investment, time horizon, and rate of return.

It just needs three inputs—your investment amount (monthly SIP or lump sum), time horizon, and a rate of return determined by your investing strategy—it simplifies things for you.

How to use Mutual Fund Returns Calculator?

Calculating mutual fund returns is a simple two-step process using the Wealth Trivia mutual fund calculator. There are many questions you must answer when using an online mutual fund calculator. Using any other Mutual Fund returns calculator in India for the first time can be overwhelming for novice investors. For investors to calculate mutual fund returns in two simple steps, the Wealth Trivia calculator has a simplified design.

Step 1: From the top-right corner, select either a lump sum or a SIP calculation.

Step 2: Enter the investment amount, the number of years you plan to hold the investment for (or continue SIP contributions), and the investment strategy. If you chose SIP, enter the monthly contribution if applicable.

By selecting an investing strategy on the calculator, you can avoid estimating a rate of return because the algorithm calculates it based on the risk profile of the plan. For instance, while carrying higher risk, aggressive strategies often produce higher returns than conservative ones. If you’d rather, you can also choose Custom from the drop-down menu and input a custom rate.

Mutual Fund Calculation Formula

You must be familiar with the formula used to compute mutual fund returns in order to do it manually. The Wealth Trivia mutual fund returns calculator is always considerably simpler (and faster). This is especially true when comparing the mutual fund investment results produced by employing either a lump sum or SIP method.

It’s useful to understand the method that was used to determine the returns on mutual funds that you can receive from your investments, even if you decide to use the Mutual Fund return calculator online. The mutual fund computation formulas are listed below. You’ll see that the formulas are different for the two investment types. Why, you ask? Read on.

Lumpsum investmentSIP Investment
M = P (1 + r/100)nM = 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.  

Two facts regarding both formulations should be understood.

First, the CAGR (compound annual growth rate) formula is utilised in the lump sum method, whereas the XIRR formula is employed in the SIP formula (Extended Internal Rate of Return). Because CAGR only works when calculating returns on a point-by-point basis. The returns for each cash flow will vary when there are several cash flows (as there are in the case of SIP), you must employ XIRR. XIRR is applicable to SIPs since it makes it possible to determine a single return percentage for all cash flows. Click on XIRR and CAGR to learn more if you’re interested in finding out more information.

It’s also important to keep in mind that your benefits will vary according on the plan you select and whether you select a direct or regular plan. If you invest through the conventional way, the fund firm will deduct their commission from your returns (i.e., through a broker, advisor, or distributor). Since there is no middleman in a direct plan, there is no commission to pay, which lowers the expenditure ratio and results in substantially better returns. In order to get significantly larger returns, you should choose a direct plan while choosing mutual fund plans in India.

Let’s say, for example, that the expense ratio difference between a scheme’s direct and regular plans is 0.75%. The returns and investment value for direct vs. regular plans are as follows:

InputsInvestment = ₹6 lakh Holding period = 10 yearsInvestment = ₹6 lakh Holding Period = 10 years
Expected return before expense ratio (p.a.) [A]13%13%
Expense ratio [B]1%1.75%
Expected return after expense ratio (p.a.) [A – B]12%11.25%
Total returns (based on expected returns after expense ratio)₹12.64 lakh₹11.42 lakh
Maturity value₹18.64 lakh₹17.42 lakh

How Mutual Fund Calculator Help You?

The mutual fund sector in India doubled in size between 2016 and 2021. The way the nation can access a wide-ranging portfolio produced by an expert is becoming popular. Through SIP, mutual funds even assist clients in maintaining consistency and discipline in their investing.

Investors are expressly warned by mutual funds that “Past performance doesn’t guarantee future results.” Therefore, investors should concentrate on the potential future performance of the fund. A mutual fund calculator can be useful in this situation.

You can use a mutual fund calculator to determine the effect of a certain variable (such as the investment amount, time period, and rate of return) on your overall gains and the investment value. Think about investing, for instance, with the intention of buying a house. You enter the data and discover that your investment worth is a bit under the price of the house you want to buy. Depending on your taste, you can alter any one of the three elements to see how your investment strategy can be modified to help you reach your goal.

Imagine your music system as a mutual fund calculator. The bass and treble knobs on an audio system are analogous to the investment amount, return rate, and time period. You employ them to enhance the output of the audio equipment. Similar to this, a mutual fund calculator allows you to change the three factors that make it up, which can help you figure out what mix of investment, rate of return, and holding time will help you reach your goals. The mutual fund returns calculator also allows you to compute mutual fund returns for both SIP and lump sum options to compare them. For instance, making a lump-sum investment of 5 lakh or making a three-year investment of the same amount can result in two very different returns. They can take a long time to calculate manually, but using a calculator to calculate mutual fund returns often only takes a few seconds.

Also Read – Best Elss Funds Or Best Tax Saving Mutual Funds

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