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Mutual Funds - An Overview
A mutual fund is an investment which is professionally managed by a company. The company managing these funds, acting as a mediator for retail investors is called an asset management company (AMC). They invest in bonds, money, stocks and other securities by collecting money from a number of investors. The amount of investment is converted to units and the investor is called the unitholder. The profit and loss of the fund is shared by the investor in accordance with the units owned.
Online Mutual Fund Calculator
The mutual fund calculator is a handy tool which helps you calculate returns on the investments made in mutual funds. Depending on the investment type (SIP or Lump sum) the maturity value of the investment can be calculated.
The calculator helps in estimating the earnings based on the trends shown in the market by the mutual fund. It helps one achieve their financial goals and budget their investments keeping in mind the amount they can receive at the maturity of the mutual fund. It is also viable in calculating the estimated earnings of the SIP by taking into account the amount, tenure and frequency at which the investments are made in the SIP..
How Does a Mutual Fund Calculator Work?
The calculator takes into account the current returns and the duration of the investment to provide the estimated returns.
One-Time Investment
As an example if one invests ₹2 lakhs in a mutual fund for 15 years which has an estimated return of 10% following formula can be used:
Future Value = Present Value (1 + r/100)^n
Present Value (PV) = ₹ 2,00,000
r = Estimated rate of return - 10% = 10/100 = 0.1
n = Duration of the investment - 15 years
The future value can be calculated as:
FV = 2,00,000 (1+10/100)^15
FV = ₹ 8,35,449.63.
Therefore the future value of this investment of ₹2 Lakh for 15 years at 10% return will be estimated at ₹ 8,35,449.63
SIP Investment
The SIP investment’s future value can also be calculated through the mutual fund calculator through the formula:
FV = P [(1+i)^n-1]*(1+i)/i
FV = Future value or the amount at maturity.
P = Amount invested
i = Compounded rate of return
n= tenure in months
r = Expected rate of return
As an example if one invests ₹2000 in a systematic investment plan (SIP) for 10 years which has an estimated return of 10% following formula can be used:
We get i = r/100/12 = 10/100/12 = 0.0083. (rate of interest to be converted to monthly). You also have n = 10 years or 120 months.
FV = 2,000 [(1+0.0083)^120 – 1] * (1+ 0.0083)/0.0083 121.48
FV = ₹ 413,032.
Therefore the future value of this SIP of ₹2000 for 10 years at 10% return will be estimated at ₹ 413,032.
Mutual Fund Calculation Formula
Even if you use the online calculator, knowing the formulas can be helpful. Here they are:
For lump sum investment: M = P (1 + r/100)n
For SIP investment: M = A [(1 + i)n - 1] x (1 + i)/i
Here, M stands for the final amount, P for the initial amount, r for the estimated return rate, n for the holding period in years, A for the SIP contribution per period, and i for the return rate. For daily or weekly SIPs, adjust i and n.
Things to note about these formulas:
Lump sum uses CAGR (compound annual growth rate), while SIP uses XIRR (Extended Internal Rate of Return). It is because CAGR works for point-to-point returns. But with multiple cash flows, as with SIP, returns differ for each. XIRR gives a single return percent for all cash flows.
Your returns will depend on your scheme and whether you choose a direct or regular plan. The fund house will take their commission from your returns in a regular plan (through a broker, advisor, or distributor). Direct plans have no middleman, so no commission, which means a lower expense ratio and higher returns.
Consider this:
If the expense ratio difference between direct and regular plans is 0.75%, with a ₹6 lakh investment over 10 years:
Direct: 12% return after expense ratio, total returns of ₹12.64 lakh, final value of ₹18.64 lakh
Regular: 11.25% return after expense ratio, total returns of ₹11.42 lakh, final value of ₹17.42 lakh
How Can Mutual Fund Calculator Help?
It is always best to estimate and budget your earnings before investing. The mutual fund calculator is a great tool in this regard as it helps you understand your returns and invest according to your future plans.
It helps you in the following ways:
The calculator can help you understand the different returns for various tenures and rates of investment
It can help you plan your investments and plan your future investment schedules.
Estimated Returns on Key Schemes
Using the Vakilsearch Mutual Fund Returns Calculator is simple. Follow these steps:
Input the Investment Amount: Start by entering the amount you are planning to invest in a mutual fund.
Select the Type: SIP or Lumpsump
Enter the Time Period: Specify the number of years you plan to stay invested.
Enter the Expected Annual Return Rate: This is the annual return rate you expect to earn on your investment. It's usually based on the fund's past performance and your own research.
The calculator will display the estimated value of your investment at the end of your specified time period.
Benefits of Vakilsearch Mutual Fund Calculator
Simplicity: The calculator is user-friendly and easy to navigate, even for those new to mutual funds. You just need to input the required data and the calculator provides an estimate instantly.
Flexibility: You can calculate returns for both lump-sum and SIP investments, making it a versatile tool for different investment strategies.
Comparability: The calculator allows you to compare potential returns from different mutual funds, aiding in more informed investment decisions.
Saves Time: Manual calculations can be tedious and prone to errors. This tool automates the process, saving you time and ensuring accuracy.
Planning: By providing estimates of your mutual fund returns, the calculator helps you plan your financial goals better.
How to Invest in Mutual Funds?
Investing in mutual funds can be accomplished through a variety of methods:
Direct Plans: By engaging with the Asset Management Company (AMC) directly, you can invest in the direct plan of your preferred mutual fund. Since these plans do not include a distribution commission, they tend to have lower expense ratios, leading to potentially higher long-term returns.
Mutual Fund Distributors: By liaising with a registered mutual fund distributor, you can receive assistance with necessary documentation. It's important to note that this route typically involves investing in a regular plan, which includes a distributor's commission fee.
Online Portals: Numerous third-party platforms exist online for investing in an array of mutual funds. These platforms usually require a nominal fee, but they offer convenience and a broad range of options.
Type of Investment (SIP/Lump sum)
The investments In mutual fund can be done in following ways:
One-Time Investment
In this type of investment one can put a sizable sum as an investment as a lump sum. It is preferred while investing large amounts such as proceeds from sale of property or inheritance or a part of disposable income which is saved.
Systematic Investment Plan (SIP)
The systematic Investment plan or SIP deducts an agreed upon amount from the account of the investor at agreed periods
Why Vakilsearch?
Vakilsearch mutual fund calculator is a tool that helps investors calculate the potential returns on their investment in a mutual fund. It helps investors determine the value of their investment at a specific point in time, based on the current value of the fund and the investor's initial investment amount.
Our online mutual fund calculator typically requires the following inputs:
Investment Amount:The amount of money invested in the mutual fund.
Investment Period: The length of time for which the investment will be held.
Current NAV (Net Asset Value):The current value of the mutual fund's assets divided by the number of outstanding shares
Estimated Rate of Return:The expected rate of return on the investment, which is typically provided by the mutual fund company.
It's important to note that the calculator is based on the inputs provided and it's an estimation and not a guarantee of returns. Also, the actual performance of the mutual fund may be different from the projected returns. If you have any queries, get in touch with our experts right away.
FAQs on Mutual Fund Calculator
The '151515' concept refers to investing in a Systematic Investment Plan (SIP) of a mutual fund for 15 years with an annual return of 15%, starting with an investment of ₹15,000 per month. It shows the power of compounding when you invest regularly for the long term.
If you start an SIP of ₹10,000 per month for 15 years, the final amount you accumulate will depend on the annual return rate of the mutual fund you choose.
Making 1 crore in 15 years via mutual funds depends on your SIP amount and the fund's annual returns. You'd need to select funds with a strong history of returns and invest a substantial amount each month.
Achieving a target of 50 lakhs in 5 years with SIP requires investing in funds that can deliver high returns and investing a significant amount each month. The actual monthly investment depends on the expected annual return of the fund.
If you invest ₹30,000 per month in an SIP for 5 years, the total amount you accumulate will depend on the fund's annual returns.
If you invest ₹20,000 per month in a mutual fund for 10 years, the final amount will depend on the annual return of the fund. An investment calculator can help you determine an estimated final amount.
You can invest 1 crore in mutual funds either as a lump sum or through SIPs in different funds. Diversification across different asset classes and types of funds can help spread risk. It's advisable to seek guidance from a financial advisor.
Making 1 crore in 5 years requires a significant investment and a strategy that provides high returns. This could include investing in high-performing mutual funds, equities, or other high-yield instruments.
One can invest in mutual funds by visiting an AMC branch directly and dealing with the mutual fund house. As KYC self-attested id proof has to be submitted with address proof.
One can visit the mutual house and invest directly after fulfilling KYC compliance.
Future value (FV) is the sum you receive upon maturity. For instance, you might use a structured investment plan, or SIP, to deposit ₹1,000 each month in a mutual fund scheme. The investment has a 10-year term and an expected annual return rate of 8%. I = r/100/12 = 8/100/12 = 0.006667 is what you have.
