Can mutual funds deliver negative returns?
Yes, mutual funds can offer negative returns if the NAV dips below the value at which you invested in the fund. This risk is particularly high for market-linked funds.
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A mutual fund is an investment vehicle that uses the collective capital pooled together from different investors. This capital is then invested in a mix of various assets like equity stocks, debt instruments, money market securities and other financial and non-financial assets. The investments chosen for a mutual fund scheme’s portfolio depend on the objective and type of fund.
Depending on the primary asset class in focus, mutual funds can be classified as debt funds, equity funds or hybrid funds. Furthermore, they can also be categorised based on their structure (open-ended or close-ended), investment style (active or passive) and investment objective (income, growth or liquidity).
A mutual fund calculator is a financial tool available online. It helps you estimate the potential returns that you could earn from a mutual fund scheme, based on key details like the amount invested, the expected returns from the fund and the period over which you plan to remain invested.
Mutual fund investments can be made as a lumpsum amount or via a SIP. Depending on the method of investment chosen, you can find two different types of calculators online, namely a mutual fund SIP return calculator and a mutual fund lumpsum return calculator.
To use an online mutual fund calculator, you need to follow the steps outlined below:
Once you provide these details, the mutual fund returns calculator will estimate the total returns from your investment as well as the fund value at the end of the desired tenure.
The formula for computing mutual fund returns depends on whether you are making a lumpsum investment or starting a SIP. Check out the formula in both cases here.
The formula for the returns from a lumpsum mutual fund investment is as follows:
A = P (1 + r/100)^nWhere:
The formula for the returns from a SIP in mutual funds is as follows:
A = P x [{(1 + r)^n — 1} ÷ r ] x (1 + r)Where:
A mutual fund investment calculator is an essential financial tool for various reasons. Some of the key benefits of using this online financial tool include the following:
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Yes, mutual funds can offer negative returns if the NAV dips below the value at which you invested in the fund. This risk is particularly high for market-linked funds.
According to data from the Association of Mutual Funds in India (AMFI), India has around 44 asset management companies (AMCs).[1] Together, they offer thousands of mutual fund schemes for investors.
Mutual fund calculators help you estimate the potential returns from a mutual fund scheme. This information is crucial for planning various financial goals and milestones in life.
To use the mutual fund returns calculator from Bajaj Broking, you only need to enter some basic details like the total investment amount, expected rate of returns and the investment period. The calculator will then compute and display the estimated returns and future value of your mutual fund investments.
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