Mutual funds are among the most popular investment options for Indians. In June 2019, the Mutual fund industry in India had a whopping INR 24.25 trillion financial assets under management (AuM). This is a fourfold increase since 2009 which was around 5.83 trillion in 2009.

Mutual funds come under risky investment. However, the returns from the mutual funds will be significant. And one can estimate the returns easily. You can access MF returns Calculator via any website and calculate your estimated Returns. In this article, we will know about mutual fund returns calculator and Mutual funds in general terms.

Mutual Funds: What are they?

A mutual fund is a type of financial institution which collects money from people and invests the collected fund in different financial instruments/securities. This financial tool helps the investors gain higher results from the investment made. The investment is made into different financial security such as stocks, short-term debt, bonds, shares, etc. The funds or money is collected from the potential investors and pooled as a single entity. The money is invested in the financial market to gain profit.

The mutual funds’ investment is collectively called ”Portfolio”. Portfolio manages all the investments made by the investors under one umbrella. The Portfolio is managed by the professionals who make investment decisions on the behalf of their clients. These professionals are called Fund Managers.

Fund Managers keep a track of market fluctuation and track all the financial assets for high returns. These professionals work on fees and are hired by Fund houses for those investors who want professionals to manage their funds.

The returns earned via mutual fund investment are divided among all the participants in proportion. Loss or profit in Mutual funds is received collectively in Mutual funds.

To be a part of Mutual Funds, you need to buy shares. Each share is held by potential investors and shows their ownership.

Mutual Funds: MF returns Calculator 

An MF return calculator helps the investors calculate their profit in terms of returns. The profit is calculated based on money invested. Investment in Mutual funds has the sole purpose of providing higher returns.

The returns earned by Mutual Funds can be of different types in nature over a period. Thus, it can lead to some complex number calculations. To calculate what the expected profit or returns would be, investors prefer MF returns Calculator.

There are different types of Mutual fund Returns calculators such as the SBI funds return calculator which caters to the needs of investors. You just need to focus on your investment and leave the calculation part to the MF returns calculator. It will help you to calculate your returns and net worth easily. These calculations are made after taking several factors into view such as lump sum or SIP, tenure of investment, potential returns.

Mutual Funds Returns Calculator: How can it help you?

When it comes to mutual funds returns, they have different natures. The types of MF funds returns are annualized return, absolute returns, total return, point-to-point return, trailing return, and rolling returns. These different types of Mutual funds returns can be confusing for the investor. 

A mutual fund returns calculator helps the investor keep all these factors and different types of Mutual fund returns in mind. You can calculate your Mutual funds returns based on your investment period 91,3 or 5 years).

A mutual fund returns calculator helps you to make clear investment plans based on expected returns. You can make your investment and financial goal around the estimated figure.

Mutual Funds Returns: Formula to Calculate the Mutual Fund Returns

Mutual fund returns have different types. Here we have explained the two major Mutual funds returns.

Absolute Return

Absolute return in a mutual fund denotes how much change in the price of mutual fund investment has occurred during redemption time. For instance, if someone invests INR 1 Lakh in a Mutual fund in 2016, January. The Mutual fund investment value is around INR 1.3 lakh in 2019, January. Thus, the calculated returns based on Absolute returns would be-

Absolute Return = (Final Investment Price – Initial Investment Amount) * 100 / Initial Investment

           For 3 years= (130000 – 100000) * 100 / 100000 = 30%

Note: Note that when you calculate absolute returns, it will always be represented in percentage.

Annualized Returns

Annualized returns in investment show the Mutual fund’s returns on an annual basis. The investor must assume that there is a constant growth in the value of his mutual fund investment. Here is the formula for annualized returns- 

Annualized Return = (Final Investment Value ÷ Initial Investment Amount) ^ (1/number of years) –1

= [(130000/100000) ^ (1/3) – 1] = 9.04%

Hence it can be seen, the annualized returns over 3 years are around 9.04%.

Mutual Funds Returns calculator: How does it work?

A mutual fund returns calculator is an instrument that helps investors in calculating potential returns on their investment. Investors have two ways to invest in Mutual funds. The first is a monthly-based mutual fund investment, the second one is a one-time investment (lump sum).

Systematic Investment plan

SIP plan is a way to invest in Mutual funds. SIP plan allows the interest investors to invest in a mutual fund scheme on a monthly basis. The investment amount is small and must be submitted according to the mutual fund scheme. Investors must keep one thing in mind, the NAV for this type of mutual fund investment is not constant. One can purchase different amounts of financial assets or units with the same amount of investment money.

Take an example of investors who invested in Mutual funds via SIP. He is paying INR 1000 for one year. At the time the SIP plan was initiated, the stock or unit you purchased had a value of INR 10. Now you can buy 100 units of that stock in a month. Now assume that the NAV has increased around INR 20. Now that investor has the option to buy only 50 units of the said stock.

With the help of an online Mutual funds returns Calculator, the investors can forecast the returns on their mutual funds. The inputs you require to calculate your returns under SIP are- investment tenure, SIP amount, and how much you expect it to grow over a specific period. A mutual fund returns calculator will give an accurate answer.

Lumpsum (one-time investment)

In this type of investment, the investor must invest a lump sum amount at once under a mutual fund scheme. This type of investment does not affect the number of units one can purchase over time. NAV does not affect this type of Mutual fund investment. 

The inputs required to make an investment in this scheme are- investment amount, tenure of investment, and expected returns.

Mutual fund Returns calculator: Advantages 

The mutual funds return calculator has many advantages. Some of these advantages are mentioned below-

• With the help of the MF returns calculator you can save your time and other resources. These calculators are easy to use.
• You can access these calculators on any financial website. This calculator helps the investors to make clear financial plans for the long run.
• You do not have to pay for using an MF returns calculator, these calculators are free of cost and available 24×7 hours.
• The accuracy of the MF returns calculator makes them an attractive investment tool, one can also go for different calculators to calculate their returns and Rate of interest.

The best Mutual Funds available for the investors

A mutual fund in India offers three types of stocks to the investor to invest in Equity Mutual funds, Debt Mutual funds, and Hybrid Mutual funds. Some of the major Mutual fund schemes for these three different mutual funds are mentioned below-

Equity Mutual Funds 

Debt Mutual Funds

Hybrid Mutual Funds

Mutual Funds: How does it function?

Mutual fund functions as an investment company that allows investors to make investments alongside other investors. While purchasing the small unit of a company, mutual funds allow the investors to become a part of that company. 

• Mutual funds allow the investors to become an owner of financial assets such as stocks or units. Company share purchase allows the investors to invest for specific investment goals. However, with the help of investment in Mutual funds, investors can generate several investment opportunities. 
• A portfolio is the collection of different investments made under a mutual fund. One can manage his portfolio with the help of a fund manager. You can gain high profits with the help of dividends and a high-interest rate in a mutual fund. You also have the option to reinvest the surplus amount.
• You can gain profit with the help of financial securities in Mutual funds. When your fund manager decides to sell high-valued securities, all the investors gain profit. You can also hold your securities to sell them at the right time to earn profit.
• Your fund manager is a professional investor who takes all the decisions related to your mutual fund investment. Fund houses often re-evaluate the portfolios to adapt to the market changes.

Mutual Fund: Why one should invest in Mutual funds

We have mentioned some of the major reasons for you to invest in Mutual funds below-

• Professional Assistance: Professional and experienced investors who are also called fund managers, help the newcomers in their investment decisions. They take all the necessary factors into consideration to gain the highest returns possible.

• No Lock-in Period: Lock-in period is an important factor for the investors. Mutual fund investment does not have a specified lock-in period. This makes it an attractive characteristic of Mutual fund
• Affordable: Investors in India do not need a lump sum amount to invest in Mutual funds. One can also invest in Mutual funds with INR 500. One also has the option to pay on a monthly basis or at once.
• Systematic Investment Plan: Systematic investment plan is a boon for small investors. SIP allows the small and newcomers to invest at their own pace.
• Fund Transfer: Investors can have the opportunity to gain more profit with the help of the fund transfer option. The investors can transfer their funds to gain higher profit within the same fund house.
• Goal-Oriented: Mutual funds are a vast sea of investment opportunities. It also caters to the needs of different types of investors according to their investment goals. It depends on the risk appetite of the investors, the type of investment, and the time of investment to meet their financial goals.
• Portfolio Diversification: Mutual funds allow to make different investment choices within one sphere. With the help of mutual funds, you can invest in different assets and securities in one go. You create a backup plan while investing in different financial assets with the help of Mutual funds. 
• Flexibility: Mutual Funds are a perfect investment choice for those investors who are looking for higher returns and flexible investment choices. The no lock-in period and SIP plan of Mutual funds help investors prepare for the worst.
• Liquidity: Liquidity is a very important aspect for investors while looking for an investment. As there is no lock-in period, investors can convert their investment into money.

Mutual Funds: Advantages

We have mentioned some of the major advantages of Mutual Funds –

• Diversification: Mutual funds offer a broad range of investment choices to investors. This is also called diversification. Diversification is a way for investors to reduce their financial loss and investment risks. It creates the chances of higher returns for the Mutual fund Investors.

• Easy: Investment in Mutual funds can be understood by a layman easily. It does not have much complexity in comparison to the big exchange markets.
• Economies of Scale: If you are a newcomer and do not know how to start your Mutual fund investment, you can go with the other big investment tools. You can become a part of major trading platforms with the help of Mutual fund investment.
• Professional Management: In Mutual funds, investors who do not have the knowledge of investment can participate. They are assisted by professional portfolio managers in making investment-related decisions.
• Different investment Choices: Once you start investing in Mutual funds, you can have a lot of investment opportunities to generate revenue. You also get to invest in the stocks of major companies.
• Transparency: Mutual Funds are regulated and supervised thoroughly to create a transparent investment process.

Mutual Funds: Disadvantages

One can count the advantages of Mutual funds easily, but these investment tools also have some major flaws that can affect your investment goals. –

• Unpredicted Mutual Returns: Investment is synonymous with financial risk. Mutual funds are no exception. While investing in Mutual funds, one should know that the risk of money loss is always there.
• Cash Drag: Mutual funds provide flexibility to investors in terms of a no-lock-in period. However, this flexibility can turn into a liability for some investors. It is due to the redemption process in Mutual funds. One can withdraw the money anytime as the funds are kept for this purpose. The money you invested does not get invested completely.
• High cost: Mutual fund’s professional management comes at a price. The Funds house charges the investors an additional fee to invest and manage their funds. In the long term, this can affect you and affect your profits.
• Diversification: Too much diversification can create unnecessary complexity in portfolio management. Thus, it can lead to confusion and wrong investment decisions.
• Tax: Mutual funds are not exempted from taxation. However, there might be some scheme which can help you with the low tax cost. You should analyze and check thoroughly how much you can pay in the form of taxation.

Mutual Funds: Who is eligible?

Anyone can invest in this investment instrument. You should know a few things –

• If you are a newcomer but have a financial goal for the long term, you can invest in Mutual funds. Mutual funds offer higher profits to investors. 
• Before investing in a specific Mutual fund scheme, you should analyze and check all the pros and cons of Mutual fund Investment.
• There are thousands of options for investors in Mutual fund schemes. Have proper research and know about all the mutual fund schemes before investing in a specific scheme.
• Always go according to your investment capacity, remember, you and your friend have two different investment goals. Never follow anyone else in this case. 
• Mutual funds can be an ideal choice for those investors who are looking for long-term goals.

Mutual Funds: When you should make an investment decision? 

You can invest in Mutual funds any time, but before deciding, please note a few things-

• There is no right time to start in terms of making investment choices in mutual funds. However, you can take the help of a financial advisor.
• Investors do not have to worry about the investment choice. All their investment decisions are taken by Fund or portfolio managers.
• SIP is an ideal choice for small mutual fund investors to gain profit. 

Conclusion

Technology has helped investors make their investment process easier. One can use the MF returns calculator to calculate higher returns for better investment planning. You can access the MF Returns calculator anywhere, anytime, and free of cost. 

If you want to earn profit with the help of mutual fund investment, you should make a financial plan that can help you with your investment choices. Always keep in mind that you must consider all the important factors before going for any Mutual fund scheme. Lastly, even though you can calculate expected profit, you can never beat the uncertain nature of the financial market.

Mutual Funds Returns Calculator – FAQs 

Q1. Explain the mutual fund return calculator in simple words?

Ans. A mutual fund returns calculator is an online tool that helps investors to calculate their returns with accuracy.

Q2. Explain Mutual funds in simple words?

Ans. Mutual funds provide the opportunity for small and big investors to invest in different financial securities.

Q3. Can I invest in more than one stock with the help of mutual funds?

Ans. Yes, the investor has the choice to invest in more than one financial asset with the help of Mutual fund investment.

Q4. Are there different types of Mutual Funds?

Ans. Yes, there are different types of Mutual funds. These mutual funds cater to the needs of different investors.

Q4. Can I make an investment on a monthly basis in Mutual funds in India?

Ans. Yes, you can make an investment choice on a monthly basis in India.

Q5. Is there any difference in the returns of a mutual fund?

Ans. Yes, the returns or profits earned by the mutual funds have different characteristics. You should always calculate your returns with the help of the MF returns calculator to avoid any financial strain in the future.