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Mutual Fund Future Value Formula:
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The Future Value (FV) of a mutual fund investment represents the projected amount your investment will grow to over a specific period, considering compound interest. It helps investors plan their financial goals and understand the potential growth of their investments.
The calculator uses the compound interest formula:
Where:
Explanation: The formula calculates how much your initial investment will grow over time with compound returns, assuming a fixed annual return rate.
Details: Calculating future value is essential for financial planning, retirement planning, goal-based investing, and understanding the power of compounding in mutual fund investments.
Tips: Enter principal amount in INR, annual return rate as a decimal (e.g., 0.12 for 12%), and investment period in years. All values must be positive and valid.
Q1: What is compound interest in mutual funds?
A: Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods, creating exponential growth over time.
Q2: How accurate are these calculations?
A: These calculations provide estimates based on fixed returns. Actual mutual fund returns may vary due to market fluctuations and fund performance.
Q3: What is a realistic return rate for mutual funds?
A: Equity mutual funds typically average 10-15% annually, while debt funds may offer 6-9%. Historical performance can guide expectations.
Q4: Can I calculate SIP future value with this?
A: This calculator is for lump-sum investments. For Systematic Investment Plans (SIP), a different formula accounting for regular contributions is needed.
Q5: How does inflation affect future value?
A: Future value shows nominal returns. For real returns, subtract inflation rate from the return rate to understand purchasing power.