Mutual Funds Calculator
Mutual Funds Calculator A mutual fund calculator is a tool which helps in generating returns at maturity based on the investment amount, expected returns on investment and the tenure of investment. The users can adjust the variables of the calculators like the amount of investment, frequency of investment, systematic investment plan (SIP), frequency of SIP, lump-sum amount, expected rate of return and so on. The returns are usually varied in nature and are mainly based on the period of investment. The users should fill in the fields accordingly to find out how much would be the principal investment to arrive at the estimated accumulated wealth at the time of maturity. Investors can plan in a better way in advance by using the mutual funds calculator to meet their financial goals.
Mutual Funds Types that an individual can invest in
1. Equity or Growth Funds
The term equity funds clearly state that the investment money will be predominantly parked in equity shares (shares of companies). The primary objective of investing in these funds is wealth creation or capital appreciation. They have the ability to generate the highest return and these are best for long term investments. Examples of Equity Funds include: – ‘Large-Cap’ funds which mainly invests in companies which run a large established business. – ‘Mid Cap’ funds which invest in mid-sized firms. – ‘Small-Cap’ funds which invest in small-sized companies. – ‘Multi-Cap’ funds which invest in a mix of large, mid and small-sized companies. – ‘Thematic’ funds which invest in a common theme. Example – infrastrucutre funds that invest in companies that will benefit from the growth in the infrastructure segment. – ‘Sector’ funds which invest in companies that are related to one type of business. Example: Technology funds that invest only in technology companies like Tech Mahindra Ltd, Oracle Financial Services Software Ltd, Infosys Ltd and so on. – Tax Savings Funds
2. Bonds or Fixed Income Funds
The term bond is a kind of fixed income instrument which represents a loan made by an investor to a borrower (government or corporate). A bond is a kind of agreement between the lender and borrower which includes the details of the loan and payment. It is mainly used by states, companies, sovereign governments to finance projects and operations. The owners of the bonds are referred to as creditors/issuer/debt holders. These bonds include details such as the end date which refers to the principal amount of the loan which is due to be paid to the bond owner and includes all the terms for fixed interest payments or variable payments made by the borrower. They mainly invest in fixed income securities such as commercial papers, debentures, government securities or bonds, bank certificates of deposits and money market instruments like treasury bills and so on. They are a relatively safer form of investments and are suitable for income generation. Examples of Bonds or Fixed Income Funds include – – Corporate Debt – Short Term – Liquid, Floating Rate – Dynamic Bond – Gilt Funds and so on.
3. Hybrid Funds
The term hybrid funds refer to an investment that is characterized by diversification amongst two or more asset classes. Here the mutual funds will park your investment in both equities and fixed-income funds, which means the fund typically invests in a mix of stocks and bonds. The aim is to offer the best of both in terms of growth potential and income generation. These funds offers the investor a diversified portfolio and hence it is known as asset allocation funds. Examples of Hybrid Funds includes – – Child Plans – Aggressive Balanced Funds – Pension Plans – Monthly Income Funds – Conservative Balanced Funds and so on.
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