In today’s world, one of the most popular avenues using which people can step into the world of investment is by investing in mutual funds. It is one of the fastest-growing investment instruments. Although mutual funds are subject to market risk, it can be said that if one is careful and makes informed investments, the chances of eventual gain are proportionally higher.
One needs to keep in mind the amount of return they are expecting from their investment and take decisions accordingly. It is essential for an investor to know about the various kinds of returns before they start investing- total return, trailing return, rolling return, and so on. To calculate the returns based on various criteria, one can use a mutual fund calculator online.
What to keep in mind while using a mutual fund calculator online?
Here are a few things to know while using such a calculator to calculate the returns:
- Ease of Use
When one calculates their returns on mutual funds manually, they have to keep a lot of factors in mind and it might get exhausting. But using a mutual fund calculator is very easy. It is not necessary to be an expert on the subject to use the calculator. It is easy and simple to navigate even for someone who is using it for the first time. It helps in easy planning of investment and makes it more likely for someone to reach their returns goals as it will provide the full estimate for whatever investment period one chooses.
- Risk Factor
The risk associated with mutual funds is something that an investor should always keep in mind. No one can give accurate and complete assurance about the returns. The best the investor can do is study the market and observe the past performance and then take an educated and informed decision about whether they want to go ahead with the investment and if yes, how much they are willing to invest. While using a mutual funds calculator to calculate the returns, it should be kept in mind that the calculator calculates the returns based on the past performance of the funds one is investing in, but it is not able to predict the risk factor.
- Time duration for investment
Before moving forward to calculate returns on their investment, one should decide on the time duration for which they can afford to carry on with the investment. It should be kept in mind that the longer the time duration for which one invests the amount, the higher is the potential returns on the investment. It depends on the individual investors if they are willing to invest their money in the same place for a long period. It is no use calculating the returns if the investor is not making an informed decision about the period for which they want to invest. You can learn more about mutual fund calculator by checking out https://navi.com/blog/mutual-fund-returns-calculator/
- Extra Costs
When it comes to mutual fund calculators, they calculate the returns as per the past trend of the given fund but what they do not consider is the sales commission. These calculators do the calculations assuming that the investor is shopping only for no transaction fee, no-load funds. These are funds for which one does not have to pay a sales commission. There is no fee charged for the purchase or sale of any of these shares. But this might not always be the case. The investor might plan to invest in funds, the transaction of which have sales commission associated with them. In such cases, it is expected of the investor that they will calculate the extra charge manually as the online mutual fund calculator only calculates the no loads, no transaction fee funds.
However, the use of online mutual fund calculators has saved a lot of time for the investors as it saves them the trouble of having to do all calculations manually and all give fairly accurate results. These calculators have also made it extremely easy for investors to formulate their investment plans anytime and anywhere as these can be accessed online at all times.