Quick Summary
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A mutual fund is a professionally managed investment plan run by an asset management company (AMC) that acts as an intermediary for small investors. The AMC invests pooled funds in various securities, such as bonds, money market instruments, and equities. Investors receive units based on their contributions, and as unit holders, they share in the fund’s gains, losses, income, and expenses proportionate to their investment.
A mutual fund calculator is invaluable for investors to calculate investment returns and develop effective investment strategies. By inputting key parameters such as investment amount, tenure, and expected rate of return, investors can quickly determine the potential returns they can expect from their mutual fund investments.
What is a Mutual Fund Calculator: Meaning and Purpose
The mutual fund calculator is a tool that helps you calculate returns from mutual fund investments. Whether you invest as a lump sum or through a SIP, it allows you to determine the maturity value of your investment. By entering the SIP amount, duration, and frequency, you can compute the projected maturity amount and adjust your financial goals accordingly.
The calculator enables you to select the type of investment in the formula box, whether it’s a single payment or a series of payments. To find the maturity amount, you input the investment amount, expected rate of return, and duration, and it will display the investment’s value at maturity.
Key Benefits of A Mutual Fund Calculator and Its Relevance in Real World
- Financial Literacy: A SIP calculator helps you make accurate financial plans by providing you with precise calculations of your investment growth. It allows you to experiment with different investment amounts and tenures to find the most suitable option for your financial goals.
- Simplifies Investment Analysis: The calculator provides an easy way to estimate potential returns, helping investors understand the impact of their investments over time.
- Enhanced Decision-Making: The calculator aids investors in comparing different investment options, making it easier to choose funds that align with their financial objectives.
- Flexibility and Adaptability: The true strength of a SIP calculator lies in its flexibility. It enables you to adjust the investment amount, duration, and expected rate of return to observe how these changes affect your overall returns. This adaptability allows you to tailor your investment strategy to align with your evolving financial situation and goals.
- Aids in Goal Setting: By estimating future returns, investors can establish realistic financial goals and timelines that align with their investment strategies.
A SIP calculator is a valuable tool that offers numerous benefits in planning and managing your investments. Whether you are a seasoned investor or a beginner, using a SIP calculator can help you make informed decisions, align your investments with specific goals, and achieve better financial outcomes.
Mutual Fund Calculation Formula
To provide you with a precise estimate of the maturity value of your investment, the Mutual Fund Calculator applies the notion of future value.
One-Time Investment
For instance, Riya made a one-time investment of Rs. 1 lakh in a mutual fund plan and held it there for ten years. According to Riya, the rate of return on investment is 8% annually. Using the following formula, Riya can determine the investment’s future value:
- Future Value = Present Value (1 + r/100)^n
- Present Value (PV) = Rs 1,00,000
- R = Estimated rate of return of 8% = 8/100 = 0.08
- N = the duration of the investment, which is 10 years.
Riya has to calculate the mutual fund investment’s future value (FV) at maturity or after 10 years.
FV = 1,00,000 (1+8/100)^10
FV = Rs 2,15,892.5.
Consequently, Rs 2,15,892.5 will be the future value of the mutual fund investment after 10 years at an estimated return of 8%.
SIP Investment
The mutual fund SIP calculator can also be used to determine the maturity value of a SIP investment.
Use the formula:
FV = P [(1+i)^n-1]*(1+i)/I
- FV = Future value or the amount you get at maturity.
- P = Amount you invest through SIP
- i = Compounded rate of return
- n= Investment duration in months
- r = Expected rate of return
FV = P * [(1+i)^n – 1] / I
Where: P = Monthly investment amount (Rs 2,000) i = Monthly interest rate (5% divided by 12, which is approximately 0.4167%) n = Number of months (5 years multiplied by 12, which is 60 months)
Now, let’s calculate the FV:
FV = 2000 * [(1+0.004167)^60 – 1] / 0.004167
= 2000 * (1.004167^60 – 1) / 0.004167
= 2000 * (1.28368 – 1) / 0.004167
= 2000 * 0.28368 / 0.004167
= 567.36 / 0.004167
= Rs 1,36,482.35 (approximately)
So, the future value of Sarah’s SIP investment of Rs 2,000 per month for 5 years at an estimated rate of return of 5% is approximately Rs 1,36,482.35 which is calculating using mutual fund return calculator.
Steps to Use the Chegg Mutual Fund Calculator
Visit the Chegg Mutual Fund Calculator:
1. Visit the Chegg website or download the mobile app.
2. Locate the Mutual Fund Calculator tool.
Select the investment type:
1. Choose between lump sum and SIP (Systematic Investment Plan) investment options.
2. Lumpsum: Enter the initial investment amount.
3. SIP: Enter the monthly investment amount and the investment period.
Provide details:
1. Enter the expected rate of return (annualized percentage).
2. Specify the investment period (in years).
Review and calculate:
1. Double-check all the entered values for accuracy.
2. Click the “Calculate” or “Calculate Returns” button.
Example Calculation:
Let’s assume you want to calculate the returns for a SIP investment of ₹5,000 per month for 5 years, with an expected rate of 12% per annum using the mutual fund return calculator.
- Access the Chegg Mutual Fund Return Calculator.
- Select the SIP investment option.
- Enter the monthly investment amount as ₹5,000 and the investment period as 5 years.
- Provide the expected rate of return as 12%.
- Review the entered details.
- Click on the “Calculate” button.
Results and Interpretation: Based on the inputs, it will generate the following results:
- Total Investment: ₹3,00,000 (₹5,000 x 12 months x 5 years).
- Expected Return: The mf calculator will calculate the expected return based on the selected rate of return and investment period.
- Estimated Returns: The mf return calculator will display the estimated returns on your SIP investment after 5 years.
Benefits of Using a Chegg Mutual Fund Calculator
Using a mutual fund calculator offers several benefits that can help investors make informed decisions and plan their investment strategies effectively. Here are some key advantages of using a Chegg Mutual Fund Calculator:
1. Accurate and Quick Calculations: A mutual fund return calculator provides precise calculations based on the investor’s inputs. It eliminates manual calculations, reducing the chances of errors and providing instant results.
2. Comparison of Investment Options: The mf calculator enables investors to compare different mutual fund schemes based on their historical returns, expense ratios, and risk profiles. It allows investors to make an informed choice by evaluating various investment options’ potential returns and associated risks.
3. SIP Planning: Systematic Investment Plans (SIPs) are a popular investment method in mutual funds. A calculator helps investors understand the future value of their SIP investments by considering the investment duration, monthly contribution, expected rate of return, and compounding effect.
4. Investment Monitoring: The mf calculator can be used to monitor the progress of investments. By periodically updating the investment values and adjusting the parameters, investors can track their investment growth and make necessary adjustments to stay on track with their financial goals.
By utilizing a Chegg Mutual Fund Investment Calculator, investors gain a valuable tool for effective financial planning, goal setting, and informed decision-making. It empowers investors to make well-informed choices and optimize their mutual fund investments for better financial outcomes.
CONCLUSION
Mutual fund calculators are valuable tools for investors looking to estimate future returns on their SIP investments. You can make more informed investment decisions by understanding the inner workings of these calculators and considering factors such as mutual fund selection, investment tenure, SIP amount, expected rate of return, and systematic investing approach. Utilize the benefits of mutual fund calculators to align your investments with your financial goals and embark on a successful investment journey.
Want to explore helpful techniques to save and grow your hard earned money? Dive in to our guide on Save Money.
Frequently Asked Questions
Which SIP is best for 15 to 20 years?
Choosing the best SIP (Systematic Investment Plan) for a 15 to 20-year investment horizon depends on several factors, including your risk tolerance, financial goals, and investment preferences. It is recommended to consult with a mutual fund expert who can assess your specific needs and recommend suitable SIP options from reputable fund houses that align with your investment objectives.
How to make 1 crore in 20 years in mutual funds?
1. Start early and invest regularly: Begin investing as soon as possible and contribute consistently over the 20 years.
2. Systematic Investment Plan (SIP): Invest through a SIP to benefit from rupee cost averaging and the power of compounding.
3. Review and rebalance: Periodically review your investments and adjust your portfolio to maintain an optimal asset allocation based on your risk profile.
How do I make 1 crore in 5 years?
Making 1 crore in 5 years is an ambitious financial goal that typically requires a disciplined from start.
1. Invest in startBed assets: Explore investment options that have the potential to generate substantial returns, such as equity mutual funds, stocks, real estate, or business ventures.
2. Take advantage of compounding: Invest early and let your money grow through the power of compounding. Reinvest your earnings and returns to accelerate wealth accumulation.
3. Systematic Investment Plan (SIP): Consider investing through SIPs in mutual funds. It allows regular investments, reduces the impact of market volatility, and averages out the purchase cost.
How to invest in a 15 * 15 * 15 mutual fund?
According to the 15-15-15 rule, investors in mutual funds make monthly SIP investments of 15,000 rupees at a 15% interest rate for 15 years. And is anticipated to generate about Rs. 1 crore after the term. If you continue to invest for another 15 years at the same rate and with the same SIP, the principle of compounding will be effective.
What is a key benefit of investing in mutual funds?
Mutual funds offer diversification or access to a wider variety of investments than an individual investor could afford to buy. Investing with a group offers economies of scale, decreasing your costs. Monthly contributions help your assets grow. Funds are more liquid because they tend to be less volatile.
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