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How To Calculate Your Investment Returns With Mutual Fund Returns Calculator

IDCW Plans in Mutual Funds And Their Impact On Your Investments

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As an investor, your goal should be to beat inflation. With saving instruments like fixed deposits giving seemingly low returns, more people have started investing in mutual funds. Though mutual funds are subject to market risk, you can still get an estimate of your returns with the help of a mutual fund returns calculator.

This online tool considers your investment amount, expected return rate and time period to calculate expected returns. So, if you’re planning to invest in mutual funds, use a calculator to plan your investments in an effective way. 

With Navi, you can start an SIP with just Rs. 500 or make a lump sum investment. Safe and secure investments with 100% paperless KYC process and minimal expense ratio are some of the major benefits of investing with Navi.  

What Type of Mutual Fund Investments Can Be Calculated with Mutual Funds Calculator

First, it’s important to understand what types of investments can be calculated with a mutual fu

Systematic Investment Plans

In this investment route, you invest a fixed amount of money in mutual funds at particular time intervals and not in one go. The investment periodicity can be weekly/monthly/quarterly/semi-annually or annually. 

As you are investing systematically, the volatility with SIP is lower. So if you are not willing to take risks, this is a great option for you. Also, with the effect of compounding, your periodical investments in SIP will bring you huge returns in the long run.

One-time investments

Lump sum investments are when you invest a certain amount of money all at once in a particular mutual fund scheme. If you can take risks, one-time investments will offer you better returns in the long term and are more fruitful in fulfilling financial goals. 

There are three broad categories of mutual funds- 

Equity

Equity mutual funds are funds that invest in stocks or shares of companies. They can be either active or passive funds. Equity funds are known to give better returns than debt funds.

Debt

Debt mutual funds are funds that invest in  corporate or government bonds. These funds are comparatively less-riskier than equity funds and offer more or less stable returns. 

Hybrid

Hybrid funds are funds that invest in equities and debt instruments in a particular proportion. These funds give better returns than debt funds and are less riskier than equity funds. 

Also Read: Key Difference Between SIP And Mutual Funds

Also Read: How To Invest In Mutual Funds Online

How does the Mutual Fund Maturity Calculator work?

To calculate the returns on these investments, the mutual fund maturity calculator uses 3 main factors:

  • The amount you invested or want to invest.
  • Type of investment- SIP or Lumpsum.
  • Duration of investment.
  • Expected rate of return.

You need to fill in these details in the calculator, and within seconds you will have your estimated result.

The Mutual Fund Returns Calculator uses the following formula-

  • For SIP: R = A [ (1+i)^n-1 ] * (1+i)/i
  • For One-time investments: R = A (1 + r/100)^n

R = amount you get after maturity

A = Amount you invested or will invest

i = Compounded rate of return

n = duration for which you will invest

r = expected rate of return

So, let’s say that you invest ₹4,000 every month for 2 years.  The compounded rate of return is 12% p.a. The estimated return will be ₹108,973= 4000*[(1+0.01) ^24 – 1] * (1+0.01)/0.01).

Also Read: Types Of Debt Mutual Funds & Benefits Of Investing In Them

Benefits of using Mutual Fund Returns Calculator Online

Here are some of the benefits of using mutual funds returns calculator:

  • It provides an estimated return on monthly and lump sum investments for 1 year, 3 years, and 5 years. 
  • It makes it viable for you to analyse and plan your financial goals and expectations. 
  • You can compare different kinds of mutual fund investments and choose one that perfectly fits your financial plan. 
  • Even if your financial knowledge is very limited, the mutual fund investment calculator is very easy and convenient to use. There is no need for the help of an expert.
  • The tool is completely free and easy to navigate. 
  • The calculator will give you a nearly accurate estimate most of the time.

Benefits of Investing in Mutual Funds 

  • You get to diversify your investments as the money you put in goes towards buying multiple assets. This reduces the risk of earning low returns.
  • Gives higher returns than normal savings instruments.
  • It allows flexible withdrawal. So, you can redeem the benefits from the units you have invested in at any point in time.
  • The money you invest is managed and allocated by an expert fund manager. He/she tracks the market and distributes assets carefully to meet the fund’s objective.
  • Passive funds come with a low expense ratio.
  • Helps you increase your wealth and beat inflation. 

Also Read: Passive Investing: All You Need To Know

Also Read: Advantages And Disadvantages Of Investing In Mutual Funds

Final Word

Investments in mutual funds have grown exponentially in the past few years. However, to plan your investments, it’s advised that you use a mutual funds returns calculator. That way, you will have a clear understanding of how much you should invest to achieve your financial goals.

You can pick Navi mutual funds for an easy entry into investments. You can start an SIP with a nominal amount like Rs. 500. You can download the Navi app and start investing today.

Frequently Asked Questions

Can an investor lose money in mutual funds or have negative returns?

Mutual funds are volatile as their NAV changes every day. So, profit can never be 100% guaranteed. With changes in economic growth and stock performance, you can lose money in mutual funds though it is rare.

Is there anything known as a best return mutual fund?

What one considers high or best return can differ from one person to another. Depending on the amount and duration of investment, returns vary for the same mutual fund scheme. Also, every investor’s expectations and financial goals differ, so the desirable return has to be different too. 

What information can you check using a mutual fund calculator?

You can check the estimate of the final maturity value of investments or estimate the required investment for your goals. You can also compare returns for different scenarios by tweaking values like duration, investment amount or strategy.

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