1. What is a Mutual Fund Returns Calculator?

Definition: This calculator determines the percentage return on a mutual fund investment based on the initial investment and future value.

Purpose: It helps investors evaluate the performance of their mutual fund investments over time.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Return} \) — Percentage return on investment
• \( \text{FV} \) — Future value of the investment ($)
• \( \text{P} \) — Initial principal investment ($)

Explanation: The formula calculates the percentage gain (or loss) relative to the original investment amount.

3. Importance of Calculating Mutual Fund Returns

Details: Understanding returns helps investors assess performance, compare different funds, and make informed investment decisions.

4. Using the Calculator

Tips: Enter the future value of your investment and the initial principal amount. Both values must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for time periods?
A: No, this calculates simple percentage return. For annualized returns, you would need to incorporate the time period.

Q2: What if my return is negative?
A: A negative result indicates a loss on your investment.

Q3: Should I include dividends in the future value?
A: Yes, FV should include all distributions (dividends, capital gains) that were reinvested.

Q4: How does this differ from CAGR?
A: This shows simple return, while CAGR (Compound Annual Growth Rate) accounts for compounding over multiple periods.

Q5: Can I use this for other investments?
A: Yes, this formula works for any investment where you know the initial and final values.