What is a Mutual Fund Returns Calculator?

A mutual fund calculator is an online tool that helps you to calculate the returns from a mutual fund investments. Either the investment is lump sum or by a SIP route, the returns can be easily calculated by a Mutual Fund Calculator. 

A mutual fund calculator gives result on the basis of investment amount, interest rate and the tenure of the investment. It tells you how much you are going to make even before you invest the money. It allows you to budget for expenses and achieve your financial goals, as you already know the amount of money you will get at maturity. 

If it is a SIP Investment, you fill out these details to get the result; SIP amount, duration of the SIP, frequency of the SIP and an estimated rate of return on the investment. If it is a lump sump investment, then you have to share the investment amount, expected rate of return and the duration to know the final amount at maturity. 

How does a Mutual Fund Total Return Calculator Work?

The ClearTax Mutual Fund Total Return Calculator uses the concept of future value to give you an accurate estimate of the maturity value of your investment.

One-Time lump sum Investment Calculation

For example, you have invested a lump-sum amount of Rs 1 lakh in a mutual fund scheme for 10 years. You have estimated the rate of return on the investment at 8% per annum. You can calculate the future value of the investment using the formula:

Future Value (FV) = 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 = Duration of the investment which is 10 years.

You have to calculate the Future Value (FV) of the mutual fund investment at maturity or after 10 years.

FV = 1,00,000 (1+8/100)^10

FV = Rs 2,15,892.5.

So, the future value of the mutual fund investment after 10 years at an estimated return of 8% is Rs 2,15,892.5

SIP Investment Calculation

A mutual fund calculator uses the below calculation for a SIP Investment. 

Future Value = P [(1+i)^n-1]*(1+i)/i
 

P = Amount you invest through SIP
i = Compounded rate of return
n= Investment duration in months
r = Expected rate of return

For example, you invest Rs 1,000 a month in a mutual fund scheme using the systematic investment plan or SIP route. The investment is for 10 years, with an estimated rate of return of 8% per year.

You have i = r/100/12 = 8/100/12 = 0.006667. (You must convert the rate of return to the monthly figure through dividing by 12). You also have n = 10 years or 120 months.

FV = 1,000 [(1+0.006667)^120 – 1] * (1+ 0.006667)/0.006667

FV = Rs 1,84,170.

So, the future value of a SIP investment of Rs 1,000 per month for 10 years at an estimated rate of return of 8% is Rs 1,84,170.

How can an Online Mutual Fund Calculator Help you?

Before you invest in a mutual fund scheme, it is a good practice to assess your return on investment. For doing so, a mutual fund calculator is the best tool as it is simple and easy to operate. Even if you are using it for the first time, you will not encounter any troubles. Check out how it helps you. 

• A MF calculator will provide you with the total estimated return for 1, 3 and 5-year investment horizons. 
• It assists you in planning your future financial strategy based on the estimated returns.

Advantages of Using a Mutual Fund Calculator

Using a mutual fund return calculator has the following benefits:

• User-Friendly Interface: The tool is extremely user-friendly, requiring you to input only three key details: the amount of investment, the duration of the investment, and your preferred investment strategy. This simplicity enables you to swiftly determine your potential returns.
• Cost-Free Access: Access to the online mutual fund calculator is completely free. There are no charges for its use, allowing you unlimited access to evaluate and plan your investments.
• Efficiency: Calculating returns on investments manually, whether it’s through systematic investment plans (SIPs) or one-time lumpsum payments, can be arduous and time-killing. Utilizing an online mutual funds calculator streamlines this task, delivering your projected returns almost instantly.
• Enhanced Comparison Capabilities: This tool offers the capability to evaluate returns from different investment methods—either SIPs or lumpsum investments. By entering various amounts, durations, and strategies, you can assess multiple investment scenarios quickly, aiding in informed decision-making.
• Goal Setting Assistance: It helps in your financial planning by showing the the future value of your investments. It also allows for adjustments in the investment period and expected rate of return, helping tailor your investment plan to meet your financial goals.

How to use ClearTax Mutual Fund Calculator?

You can effortlessly use the ClearTax Mutual Fund Calculator based on the nature of your investment.

Lump-Sum investment:

• Select the One-Time Investment (Lump Sum) option in the ClearTax Mutual Fund Calculator.
• Provide the details of amount of investment, expected rate of return and the duration of the investment.
• CearTax Mutual Fund Calculator will show you the value of the investment at maturity with a breakup of invested amount and earned interest. 

SIP investment:

• Choose the SIP option in the ClearTax Mutual Fund Calculator.
• Now fill the amount of investment, frequency of the SIP, expected rate of return and the duration of the SIP.
• ClearTax Mutual Fund Calculator will tell you how much you are going to have at maturity of investment.

How to invest in mutual funds?

You can invest in mutual funds through different routes.

1. Direct Plans: You can approach the asset management company (AMC) and invest in the direct plan of your choice. These plans have a low expense ratio because they don’t charge a distributor commission. Hence, you can earn a better rate of return over the long-term.
2. MF Distributor: You can contact a registered mutual fund distributor who will help you out with the requisite documentation. You will be investing in a regular plan which will charge a distributor’s commission.
3. Online: There are several third-party portals available online. You can visit any of them and invest in a variety of mutual funds by paying a nominal fee.