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How to Calculate Mutual Fund Returns in Simple Terms?

Submitted by admin on February 13th, 2025

Mutual fund investments can greatly increase your financial value even though most people struggle to determine their exact returns. People who have selected mutual funds need not be worried about calculating their profit amount. A clear and basic breakdown follows.

Understanding Mutual Fund Returns

Through mutual fund investment your money purchases units at current NAV (Net Asset Value) rate. The market operates on factors that cause the NAV to fluctuate throughout time. The increase in the NAV since your investment determines your financial gains.

Your investment increases when you purchase units at ₹10 each because those units grew to ₹12 after a year. Your return arises from the purchase price difference with the current market value.

Different Types of Returns

The period of investment determines which type of return you should analyze.

• Total financial gain or loss about your investment constitutes absolute return. Using this method becomes beneficial when investing for brief durations between a few months to one year.
• The annualized return indicates the average yearly summation of your investment value throughout multiple years.
• CAGR (Compounded Annual Growth Rate) stably calculates investment growth over time. It’s useful for long-term investments.
• XIRR Method provides SIP Returns calculations for regular investors because they buy at multiple prices during their investment period.

How to Check Your Returns?

Superficial mathematical calculations will not be necessary for your return checks. You can easily verify mutual fund returns through three simple methods.

• Your mutual fund provider releases regular statements that display your invested amount together with your current value and total returns.
• The Internet provides several platforms with mutual fund return calculator functions available for users. The system requires the input of your investment information followed by an automatic returns display.
• Download the mobile application of your mutual fund investment provider such as Groww, Zerodha, or Paytm Money to view your profit amount directly.

Why Do Returns Fluctuate?

The returns from mutual funds do not have a set amount. The value of mutual funds shifts through movements in interest rates and stock market movements and economic environmental changes. Returned gains from your investment can vary between months showing higher numbers along with months that result in lower numbers. Over time mutual funds demonstrate higher return performance when compared to conventional savings account investments.

Final Thoughts

You can easily determine the returns of mutual funds. You can ignore fancy calculations by following the performance of your investment either on printed statements or through applications and digital calculators. People investing over an extended period should concentrate on total asset progression above short-term market movements.

Do you seek the correct mutual fund for investment? Make your first move now to allow your funds to compensate you.

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