Mutual funds have become extremely popular as people have become savvier about investing. People have begun to explore mutual funds for savings and investments, and a mutual fund calculator is required to produce an exact estimate. With this calculator, you will be able to know how much you can make on an investment that involves a certain sum of money.
What is a Mutual Fund Calculator?
Before understanding what a mutual fund investment calculator is, how it works and the benefits of using it, let’s understand what mutual funds are. A mutual fund is an investment product offered by the mutual fund industry which can be applied to both the retail and institutional segments. The primary purpose of any company that offers an investment product is to generate financial returns for the investors and make their money grow over a period of time. However, it is not possible for any investor to invest in a specific fund without knowing its past performance and how much return it can expect.
The MF calculator is an instrument used to calculate the return earned by a mutual fund. It aims at helping the investor get precise data on mutual fund performance. It also enables the investor to figure out the return for the past 12 months and compare it with industry average returns. This calculator displays an annual return figure, the benchmark return in the first column, a benchmark (average) benchmark return number in the second column and a year-to-date (YTD) comparison between them in the third column.
Although the “rating” given by the rating agencies usually provides data on a mutual fund’s performance over a specific time period, there is no separate metric that uses data from different periods to determine past performance.
How does a Mutual Fund Calculator Work?
Now that we know that a mutual fund calculation program helps you determine the return you can expect from your investment, the next thing we have to see is how this mutual fund return calculator works. When you opt for a systematic investment, you either invest on a monthly basis, annually or go for a one-time lump-sum investment.
This investment calculator software is designed in such a way that, irrespective of the type of investment, it is able to give you very precise information about the return. However, while calculating the return, one should always remember that the NAV of the funds is volatile and changes every month. So every month, you can purchase a variable number of units depending on the rate of the NAV for that particular month. Moreover, when you take a lump sum investment or invest all at once, you can get a consistent rate of NAV for all the units purchased, which is another advantage of investing a substantial amount in one go.
So as to calculate the return, the MF calculator considers all these factors and gives a very accurate result. On the other hand, if you do the same thing manually, you might end up making some calculation or data retrieval mistake. While using this calculator, you just have to input the amount you have to invest, either monthly, annually, or lump sum, the expected return, and the duration of the investment. That’s it! Within a matter of seconds, you will know the exact amount you can expect as a return on your investment.
What are the Benefits of the Mutual Funds Calculator?
1) Easy to use:
When executing even the smallest calculations, we all prefer to use our standard calculators over performing them by hand. So, when it comes to some complex calculations, the choice is quite obvious. MF return calculators are super easy to use with a very user-friendly interface. It can become your go-to companion if you are a beginner in this field who is just starting with investments and needs to learn about the bigger picture. You have to fill up three columns, and the results will be right in front of you.
2) Provides Fast and Accurate Results:
It is not possible to get accurate return results with a human calculation; however, when you use an MF return calculator, you will get quick and error-free results. By using an automated method backed by a fixed formula system, the tedious and error-prone human calculation process is completely eliminated.
3) Making Knowledgeable Decisions:
Consider the fact that the results you get from an MF calculator are way more precise than the manual computation; this helps you make an informed decision regarding your investment. You can now check how much you have to invest on a monthly, yearly, or single-time basis to get the desired return. These calculators encompass the data regarding the past performance of any specific fund and thus provide you with the selected fund’s specific return.
4) Benefits Of Beginning Early:
Investors may begin their planning at a very early stage of their lives since the mutual fund return calculator assists in determining the amount that you need to invest weekly and serves as a reliable reference. Additionally, it will assist you in forming a beneficial habit of regularly investing in mutual funds. Long-term objectives may be accomplished without feeling burdensome if you practice consistency and discipline.
5) Helps with Mindful Investment:
Over the last few years, citizens of the world have become more conscious and aware of their savings, and they are seeking better returns on their investments. To make an educated decision, one needs to have information about various aspects of investment. Using a mutual fund investment calculator, investors may carefully plan their investments in order to meet their long-term financial objectives. By doing this, you may decide on the factors that will almost certainly produce the biggest profits.
In order to avoid fraudulent use of the mutual fund calculator, all data on past performance and return calculation, as well as the value of a mutual fund given various investment time horizons and other hypothetical scenarios, is collected and maintained by authorized representatives in countries where MFs are offered. Despite some inherent risk, these investments offer larger returns than other types of investing. There is always a chance of losing money when investing in mutual funds. However, such circumstances are pretty readily averted with some careful money management and professional advice.