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Mutual Fund Returns Calculator
Calculate your Mutual Fund returns using our online Mutual Fund calculator.
What are Mutual Funds?
A Mutual Fund is a pool of money collected from different Investors to invest in various financial securities managed by a professional fund manager.
In mutual fund investment options, money is collected from various investors and invested in equity, bonds and debt funds. The gain from the investments gets distributed among the members after deducting the taxes and other charges, in the ratio of the money they have invested. A mutual fund is a good investment option for people who do not want to spend their time on research but want their wealth to grow.
Into the history of mutual funds in India, we discover that the first mutual fund launched in India was in 1963. The government of India in association with the RBI (Reserve Bank of India), launched the first Mutual Fund. The main objective was to encourage people to develop the habit of saving and investing. UTI (Unit Trust of India) was formed in 1963 with an Act of Parliament and functioned under the Regulatory and administrative control of the Reserve Bank of India (RBI). In 1978, the UTI was de-linked with the RBI & its regulatory authority went over to IDBI (Industrial Development Bank of India).
Ways for Investing in Mutual Funds
Investing in mutual funds can be done in two ways:
-
SIP Investment
-
Lumpsum Investment
Let's discuss them briefly.
- Sip investment:
SIP full-form systematic investment plan is a way of investing in mutual funds. Sometimes, new investors think that SIP and mutual funds are the same. In SIP, a person invests a certain amount of money on a monthly, quarterly, half-yearly or yearly basis. The decision is up to the investor.
SIP helps an individual to take advantage of the compounding effect. Apart from this, Money is invested regularly, which encourages one to become a disciplined investor over time. This means that your return is reinvested every time to make more money for you, and as well quoted “The early you start, the more you earn”.
- Lumpsum Investment:
A Lumpsum investment is one wherein you invest a large sum of money in various assets, depending on the financial goals of the investment holder. A Lumpsum investment is different from an SIP investment. In the SIP investment plan, you invest a small amount regularly. Whereas, in a lumpsum investment, you invest a large amount of money once.
The initial investment amount could vary from person to person based on their risk appetite. You can choose the assets you want to put your money into. Apart from this, the person has to decide the period, for which they want their money to work.
A Lumpsum amount can be invested in various investment options like mutual funds, index funds, debt funds, equity funds etc.
What is a Mutual Funds Calculator?
A mutual fund calculator is a mathematical utility tool that helps you to calculate the returns on your mutual fund investment. Pocketful online mutual fund calculators enable, you to calculate returns on SIP and Lumpsum investments.
The platforms offer you a smooth and hassle-free user experience. You just have to enter the details like the type of investment, i.e. SIP or lumpsum. After that enter the investment amount, interest rate and the period of investment.
How does a Mutual Fund Calculator Work and Why is it Necessary?
There are two different ways to invest in mutual funds. The first is through a SIP & the second is via a lumpsum investment. The calculation formula also differs from one another.
The formula for calculating returns on an SIP investment:
A=P(1+r/n)^nt
| A | The future value of your investment |
| P | The amount that you invest each month |
| R | The rate of return on your investment in the case of mutual funds generally depends on the market dynamics |
| N | Frequency of how many times your money gets compounded in a year |
| T | Period of your investment |
Let us understand it with an example.
Suppose Mr Dhruv wants to start his investing journey. For this, he decidedt to choose an SIP mutual fund.
Mr Dhruv can easily invest 10,000 rupees monthly. He wants to know his investment value after 20 years, & the ARR is 15% p.a.
He will simply put the values in our online SIP calculator & voila! He gets his final investment amount worth of ₹1,51,59,550.
The formula for calculating returns on a lumpsum investment:
A=P(1+R)^T
| A | Maturity amount |
| P | Principal amount |
| R | Interest rate |
| T | Investment tenure |
Let’s understand it with an example.
Mr Sam has a Lumpsum of 10,00,000 rupees that he wants to invest in a mutual fund that yields an average return of 12% p.a. For the next ten years.
Now, he wants to know the future value or the amount Sam will receive after ten years.
He can know that by simply using our lumpsum calculator. There, he will enter the Lumpsum amount, rate of return and the number of years for which he wants his money to be invested.
Here he has it. Rs. 31,05,848.21
Why you should use a Mutual Fund Calculator in India?
There are various benefits of using an online mutual fund calculator. Some are listed below:
The flexibility of investment that mutual funds provide, makes the process of calculating the returns equally tricky. These calculations require a high QA to be solved. Pocketful’s online mutual fund calculator does all the calculations for you.
It helps to calculate the exact amount you will receive when your investment matures. Otherwise, it is time-consuming to calculate the returns using a traditional calculator.
Online calculators help you to compare different investment options. Which in turn helps you to make better financial decisions. So, you can achieve your financial goals with ease.
Knowing your maturity amount with ease beforehand helps you to do your financial planning accordingly. Using the tools that are present online is an efficient way to keep track of your growth. Using different online calculators for various purposes helps you to stay motivated and pivot at the right time.
