Calculating mutual fund returns is no rocket science. Today, online mutual fund calculators from fund houses help you compute returns from your mutual fund investment in a jiffy. These calculators are easy to use and give you an estimate of the maturity value of your investment. Here’s how you can use them to compute returns.

Calculating mutual fund returns online through calculators

Computing mutual fund returns with the help of online calculators is easy. While the specifics may slightly differ, all you need to do is open a calculator and input the following:

• The amount you are willing to invest in a fund, along with investment frequency if you invest via systematic investment plans (SIPs).
• The fund’s annualised returns, which you will get from the fund house’s website or independent third-party mutual fund portals.
• Investment tenure, which is the total duration till which you wish to remain invested.

Upon filling in these details, the calculator will show the estimated value of your investment at the end of the tenure. Almost all fund houses have an online calculator to help you compute returns.

Essential things to keep in mind while calculating mutual fund returns online

Some of the essential things you need to keep in mind during this exercise are as follows:

• The final corpus may be different

While the calculator throws up the final maturity value, note that there could be a difference in the actual corpus you accrue. It’s because the rate of return you get isn’t fixed; it fluctuates over time. If returns dip, the same will bring down the value of your investment. On the other hand, if returns go up, it will result in greater wealth creation. Also, the calculator does not factor in taxes that are applicable at the time of redemption.

• Time period consideration

You need to consider the time frame for which you want to calculate returns. Mutual fund returns can vary significantly over different periods. Returns go up when markets are doing well. On the other hand, if they are experiencing a downturn, returns will dip.

• Type of return and the difference

You need to understand the different types of mutual fund returns and their differences. For example, while absolute returns showcase actual gain or loss over a given period, annualised return represents the amount of money your investment has earned annually.

• Investment amount and frequency

Factor in the initial investment amount and any other subsequent investments or withdrawals made during the investment period.

Benefits of using a mutual fund return calculator

Given below are the benefits of using an online mutual fund calculator:

• Easy and straightforward

The calculator is easy to use without any complexities. The fields are self-explanatory and provide quick calculations that help you compute potential returns associated with your mutual fund investment.

• Time-saving

Manually performing complex calculations can be time-consuming and prone to errors. Online calculators automate the process and help you save time.

• Goal planning

Many mutual fund calculators allow you to set financial goals and determine how much you need to invest regularly to achieve them. With this feature, you can create a realistic and actionable investment plan.

Summing it up

While returns are essential when investing in mutual funds, choosing a fund that matches your investment goals is critical. Also, analyse a fund’s long-term returns and look for consistency.