By far, in the current atmosphere of investment, mutual funds have proved their mettle, being good choices for many investors. Mutual funds let investors delve into equity, but in a less risky way. Although mutual fund investment is not completely devoid of risk, it can offer investors opportunities for investing in stocks and estimating the markets before they get into direct equity, if that’s on the cards.
In the digital age that we live in, all financial activities are conducted online. Investing in mutual funds can also be engaged online, and picking a fund that meets your needs is not a challenge. Furthermore, tools like the online mutual fund calculator can tell investors how much to invest, depending on the potential returns on investment that they are looking for. Besides this, the calculator can let investors know about any fees charged by fund houses, and with this in mind, investors may consider a specific mutual fund to invest in according to budgetary considerations.
Why Invest in Mutual Funds?
The main reason to invest in mutual funds is not simply the ease of use of devices like the best mutual fund calculator, but also a more crucial reason. Mutual funds offer investors, both large and small, chances to invest in funds that suit their investment goals appropriately. The way mutual funds are different from investing in direct equity is that mutual funds pool amounts of individual investors and invest this pooled amount in a range of securities. The “fund”, therefore, may consist of pure equity, pure debt, or a mix of both.
In a mutual fund, a fund manager handles your investment after you have discussed your financial and investment goals. Your risk appetite is also considered, and you may want to invest in a pure equity fund if you are a risk taker with expectations of high rewards. On the other hand, if you want a balance, you may choose a hybrid fund (a blend of equity and debt instruments), and if you don’t want to take risks at all, you can choose funds with pure debt instruments. Anyway, the fund manager can help select the right fund for your needs, but you must do your own research as well.
A Mutual Fund Calculator – Explained
Most banks and AMCs (asset management companies) offer you mutual funds if you wish to invest. You can also do your own homework online to find out which mutual funds have generated good returns in the past, and base your judgment accordingly. Most financial institutions that offer mutual funds to invest in give you the facility to use the mutual fund calculator.
A mutual fund calculator is an online device that tells you how much of your initial investment will get you in terms of returns based on different interest amounts that may apply. As a result, depending on your financial goals, the mutual fund calculator lets you plan your investment and gives you a clue about how much to expect, with regard to returns. Since mutual funds invest in the market, you may ask, how are returns predicted, as markets themselves are unpredictable? Well, when you invest in a mutual fund, you can always study the past performance of the fund, letting you know about the return on investment and how much interest was earned.
The mutual fund calculator will also help you to decide if you wish to invest in mutual funds via a SIP (systematic investment plan). Besides this use, the mutual fund calculator can help you to decide on returns you may get if you increase your mutual fund investment through a step-up SIP.
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Know About Mutual Fund Fees and Calculator Use
While you may be enthusiastic to invest in a mutual fund, you should be well aware of any fees which are applicable to the fund. You can use the mutual fund calculator in the following manner, and get information about returns on investment with fees in due consideration:
- Enter your investment amount.
- Enter the duration of the investment.
- Enter an estimated rate of return (annually), based on the past return rates of any given fund.
- Enter the fees that the fund house charges. This is called the expense ratio (ER).
- You can submit all the information and the online calculator will automatically give you the figure of returns.
Make Wise Decisions
The wiser and more prudent you are while investing, the more gains you will make. In mutual fund investment, you may get steady and good returns if you make use of the mutual fund calculator to choose the perfect fund for you. Fees play a large role in your decision to invest. Comparing mutual funds online, before you plunge to invest, is a wise move while deciding on funds, and the calculator helps immensely in this.