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Future Value Formula:
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Future Value calculation helps investors determine how much their mutual fund investments will grow over time, taking into account compound interest and the time value of money.
The calculator uses the compound interest formula:
Where:
Explanation: This formula calculates how much your initial investment will grow when compounded annually at a specified interest rate over a given period.
Details: Understanding future value helps investors make informed decisions about mutual fund investments, plan for financial goals, and compare different investment options based on potential returns.
Tips: Enter principal amount in INR, annual interest rate as a decimal (e.g., 0.12 for 12%), and investment period in years. All values must be positive numbers.
Q1: What is compound interest in mutual funds?
A: Compound interest means earning interest on both your principal amount and the accumulated interest from previous periods, leading to exponential growth over time.
Q2: How accurate is this calculator for mutual fund returns?
A: This provides an estimate based on fixed annual returns. Actual mutual fund returns may vary due to market fluctuations and fund performance.
Q3: Should I consider inflation in my calculations?
A: Yes, for long-term planning, consider using real returns (nominal returns minus inflation) to understand purchasing power.
Q4: What's the difference between SIP and lump sum investments?
A: SIP (Systematic Investment Plan) involves regular investments, while lump sum is a one-time investment. This calculator assumes lump sum investment.
Q5: How often is interest compounded in mutual funds?
A: Most mutual funds compound returns daily, but this calculator uses annual compounding for simplicity. Actual returns may be slightly higher.