If you have invested in mutual funds, it is natural that you want to calculate your return on investment. A reliable mutual fund calculator thus becomes a priority to find. Return on Investment, when calculated appropriately, will help you understand your prospects related to a variety of investment options. The best part about calculating returns online is that you get to see hidden charges that might come up with your investment. You can also explore other prospects related to your risk tolerance when it comes to financing.
What is Return on Investment?
ROI or return on investment is a percentage that will help you understand the extent of benefits you are likely to gain in comparison to your investment. Foreign investor looking at the returns is important because it shows the profitability of your particular investment in a mutual fund. One major factor to understand about ROI is that it is likely to be both negative and positive depending on whether you are gaining benefit from an investment or losing money.
What is an ROI Calculator?
An ROI calculator allows you to review your returns on a number of investments across different periods. The very basic calculator that you will encounter online will ask you to put your initial investment, the returned amount, and the period of investment. All you have to do is click to see the results to understand your gain or loss on a particular investment. An online mutual fund calculator can allow you to check the annualized return, the absolute return, or the compounded annual growth rate of your investment.
How does an ROI Calculator Work?
You do not have to do much but put the corresponding values in the right boxes or blanks. Once you press Enter, the calculator will do the work for you. Annualized or absolute returns can be calculated on paper as well. However, it will take you quite a while and you might even make some mistakes with the calculation. Since you have the option of getting a mutual fund calculator, you can make your work easier and just do it online.
How to Calculate Returns Using a Mutual Fund Calculator?
There are multiple outlets that allow you to check your ROI online. Here are some basic steps to help you use a such a calculator:
1. Input your amount
Look at the blanks and enter the amount initially invested in the corresponding box.
2. Input expected rate
Enter the estimated rate of return for your particular stock of mutual funds in the corresponding blank.
3. Input the duration
Enter the holding period for which you want to know the return of investment.
4. Get the result
Click Okay or Enter and the mutual fund calculator will display your returns.
What are the Benefits of Using Online ROI Calculators?
For any investor knowing the return on investment becomes essential because you want to grow your wealth and correct your mistakes whenever possible. An online calculator helps make it infinitely easier on a lot of accounts. Here are some of the major benefits that you can get by calculating your returns online:
● Speedy and accurate
You will save time and will get the correct calculation without doing it yourself.
● Get absolute results
Depending on the calculator you are using, you can check the absolute and annualized return on the investment.
● Evaluate your options
You can also select which mutual funds to invest in, based on your financial preferences related to risk tolerance.
● Explore
Some calculators also allow you to set up a benchmark and check the returns against it.
Calculating returns using a mutual fund calculator is probably the easiest way to get accurate results efficiently. Different calculators will have different facilities to offer you like giving suggestions based on your investment interests. It falls upon you to choose the most suitable calculator as per your requirement.