Mutual Fund Investments bring great returns if you do it in a planned way. An effective investment strategy and buying and selling funds at right time can yield a high percentage of return. But these returns need strategized calculations. So, you must know how to calculate returns on Mutual Funds. Either you can do the calculator manually or use the mutual fund calculator. There are many AMCs that provide a mutual fund calculator on their websites to gather all the information about the returns on mutual funds. You can check different formulas used to calculate return on Mutual Funds investments and the advantages of using an automated Mutual Fund Calculator.
Formula Used for Calculating Return on Mutual Funds
You can check out the formulas that are used to calculate different types of returns on mutual fund investments:-
- Absolute return = (Present NAV – initial NAV) / initial NAV × 10
- Simple Annualised Return: [(1 + Absolute Rate of Return) ^ (365/number of days)] – 1
Information Need to Calculate Returns through Mutual Fund Calculator
It is not easy to calculate the return on the Mutual Fund Investment manually using the formula. You will need a lot of mathematical expertise to implement the formula. Therefore, if you use the Mutual Fund Calculator then you can choose the best performing mutual funds for yourself.
Here are the information you need to enter to calculate the amount you will receive at maturity:-
- Nature of Investment whether it is a One Time Investment or a Systematic Investment Plan.
- Amount of Investment you are willing to make.
- Frequency of SIP in Months if you are choosing Systematic Investment Plan.
- Expected Rate of Return
- Duration of Investment
After entering the above information, you can calculate the exact amount you will receive at maturity and once you deduct your investment amount from the maturity amount, you will know the exact amount of return.
This is how you can calculate returns on Mutual Funds.
Advantages of Using Mutual Fund Calculator
Here are certain advantages of using a Mutual Fund Calculator for determining the return and you can explore them below:-
Helps in Making Effective Decisions
Calculating different amounts of investments at different rates of return will help you to find the best mutual funds. You can compare the return percentage of different mutual funds and use it for evaluating the exact amount of return using the mutual fund calculator.
You don’t have to apply mathematical formulas manually to calculate the returns. The interface of the calculator is simple and entering some basic information in the calculator will display the amount of return you will receive on your investments.
Manual calculations of Returns on Mutual Funds take time and a small error can give wrong results. Therefore, using an automated calculation method gives you quick results of returns and there is no margin of error through this method.
You can plan your mutual fund investments and choose the best mutual funds for SIP by calculating returns through calculators. Adjusting the percentage of returns and the time period will increase or decrease the amount of return on your investment. But after knowing the returns, you can implement an effective strategy and determine which mutual fund can yield a high return on investment.
It will be easy for you to get the exact amount of returns on your investments if you use the Mutual Fund Calculator. You can even apply the manual formula for calculating returns but it will take time and a small error can give you an incorrect result. Therefore, using some basic information in the calculator, you can calculate the returns on Mutual Fund Investments.