Mutual Fund Return Calculator
Mutual Fund Calculator
A mutual fund calculator helps estimate the future value of your investment based on the invested amount, expected rate of return, and duration. You can use it by entering the lump sum or SIP amount, expected annual return, and investment period to get an estimate of potential returns. It simplifies financial planning and helps set realistic investment goals.
Mutual Fund
What is Mutual Fund?
A mutual fund is a pooled investment vehicle where money from multiple investors is collected and invested in stocks, bonds, or other assets, managed by professional fund managers.
How Mutual Fund Works
Investors buy units in a mutual fund scheme, and the fund manager invests the pool of money in different securities. The value of these units fluctuates based on market performance, and investors earn returns through capital appreciation or dividends.
Advantages of Mutual Fund
- Professional fund management.
- Diversification reduces risk.
- Flexibility to invest via SIP or lump sum.
- Liquidity – easy to enter or exit.
Disadvantages of Mutual Fund
- Subject to market risks.
- Fund management fees reduce returns.
- No guaranteed returns.
- Over-diversification may limit profit potential.
Example of Mutual Fund Return Calculation
Suppose you invest ₹1,00,000 in a mutual fund for 5 years with an expected annual return of 12%:
Using the formula for compound interest:
Future Value (FV) = P(1 + r)^t
Where:
- P = ₹1,00,000
- r = 12% / 100 = 0.12
- t = 5 years
Substituting the values:
FV = 1,00,000(1 + 0.12)^5
FV = 1,00,000(1.12)^5
FV = 1,00,000 × 1.7623
FV = ₹1,76,230
So, after 5 years, your investment will grow to approximately ₹1,76,230.
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