A mutual fund calculator is a practical financial tool that permits individuals to compute the returns earned on their mutual fund investments. This tool helps to predict the overall returns on the maturity of the scheme, given the principal investment amount and expected rate of return. It takes into account both the investment routes, i.e., SIP or Systematic Investment Plan and Lumpsum mode.
For good measure, some mutual fund return calculators also provide the option to adjust the returns against inflation to offer a more realistic picture.
How does a mutual fund return calculator help you?
An MF return calculator can be immensely helpful in the following ways:
- A mutual fund calculator offers you with the estimated returns for the entire duration of your investment. You may calculate your investments’ 1 year, 3 years, and 5 years returns using the mutual fund calculator.
- It is a tool that is available to all investors at free of cost. It is very easy and convenient to use, i.e., even a layperson can use it with relative ease.
- Mutual fund return calculators offer reasonably precise returns on your mutual fund investments. However, you should be mindful that as mutual fund investments are subject to market risks, you cannot predict the returns with pinpoint accuracy.
- A mutual fund calculator helps investors to plan and successfully manage their finances in a better way once they have an expected idea of the future value of their investments.
How does a mutual fund calculator work?
As mentioned above, a mutual fund return calculator will give you the investment value at maturity by calculating the returns on your mutual fund scheme according to your investment horizon. You can adjust the variables of the calculator such as the amount of investment, the duration of SIP, the expected rate of returns, SIP/lump sum, and frequency of SIP.
When we talk about mutual fund investments, one of the most essential aspects is the expected returns on the investment. A mutual fund return calculator helps to reveal the same.
How to invest in mutual funds online?
There are various avenues from where an investor can purchase mutual fund units:
- Direct Plans – You can directly approach the AMC [Asset Management Company] and invest in the direct plan of your choice. Investors who invest in mutual funds via this route enjoy low expense ratio as AMCs don’t charge distributor commission. Hence, as an investor, you can earn a better rate of return.
- Mutual fund Distributor – You can also contact a registered mutual fund distributor. The designated person will help you out to complete the requisite documentation. If you invest via this route, you will be charged a distributor’s commission
- Online – There are several third-party portals available online to investors. You can visit one of them and invest in different types of mutual funds by paying a nominal fee.