Mutual Fund Calculator With Inflation – Find Out Inflation Adjusted MF Returns

How Mutual Fund Calculator With Inflation Works?

Mutual Fund calculator with inflation helps you in calculating the real returns after adjusting the inflation and gives you the future value of your investments made through monthly SIP’s or lumpsum SIP in any mutual fund scheme.

This Mutual Fund calculator with inflation is designed to give you accurate results for both monthly and lumpsum SIP at once keeping inflation in focus during investment tenure.

You just need to enter the monthly or Lumpsum amount invested, enter expected return, enter investment period(in months) and average rate of inflation during your investment period, it will give you the future value as well as tells you about the wealth gained on investment made.

It is very easy to use the mutual fund calculator, let us understand by taking an example:

Suppose you want to start an monthly SIP of Rs.1000 in any mutual fund scheme for a period of 15 Years and you expect the return from that scheme to be around 15%(annually). Now how would you know how much you will get after 15 years of consistent SIP deposits, keeping the inflation in calculation during the investment tenure?

To solve this you can use moneycontain Mutual Fund calculator with inflation and get the result easily, So enter the values in below fields to get the results:

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Learn more about reverse inflation and inflation here.


What Are Mutual Funds?

In simple terms mutual fund is a scheme offered by mutual fund companies to investors, in order to invest their money systematically in any given fund. The fund runs by a professional fund manager whose sole job is to find good quality stocks or other different financial assets such as ETF’s, bonds, government securities etc. in order to garner highest profit for investors.

An Asset Management Company (AMC), is a company where a fund manager works and manages your money.

The most common method for making an investment is Systematic Investment Plan popularly known as SIP,  it is a method to invest fixed amount either monthly or lumpsum (onetime) in any mutual fund scheme. By doing systematic investment one can expect the maximum return on invested capital.

An SIP can be as low as ₹500 and can be invested at predefined intervals such as weekly, monthly, quarterly, semi-annually, annually.

Many people think SIP and mutual fund are two different things, however SIP is just a method of investing a fixed money at predefined intervals in a mutual fund scheme. So, SIP’s are nothing but a way to invest your money in mutual funds.

There are two types of funds in a mutual fund scheme, Open-ended funds which does not have an ‘expiry’ for the fund. It can go on forever where as Close-ended funds are time-bound.

An open-ended fund allows investors to enter and exit the fund anytime after the NFO, whereas a close-ended fund restricts the entry and exit of investors to the NFO period.

NFO stands for New Fund Offer. When a mutual fund scheme offers its units for the first time for investments, it is known as a New Fund Offer (NFO). In its essence, a New Fund Offer is similar to an Initial Public Offering (IPO).

Another thing is, unlike close ended funds, open ended funds do not have a limitation on the number of units they can issue. More units of an open ended fund get created when an investor invests money in the fund.

Likewise, when an investor redeems units of an open ended fund, the mutual fund units are taken out of circulation.

While open ended funds allow investors to make use of systematic plans – systematic investment plans (SIPs), close ended funds do not support this facility.

There are many types of investment that can be made in different financial instruments such as Stocks, Bonds, ETF etc. However, investing is not everyone’s cup of tea, understanding the fundamentals(reading balance sheets, cashflow, profit-loss statement, annual reports etc. as well as doing technical analysis to choose stocks and create a portfolio takes time, learning and energy.

Instead, you can choose the list of different mutual funds schemes offered by the various Asset Management Companies(AMC) such as SBI, HDFC, UTI, AXIS, ICICI etc. and invest in them in a systematic way. This way is much better as you would be better disciplined with less risk.

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Why Invest In Mutual Funds?

This is the most important question anyone would have in his/her mind, let us debunk this through an example:

There are three friends by name Krishna, Dani and Kuldeep after completing their education, they started working in a company. All of them are of same age group and started working at 25, as they were very close friends all of them stayed together and enjoyed their company.

They decided they won’t work till retirement and wanted to open their own organization, but for this they need some capital, therefore all decide to save some money from their salaries and invest that in any mutual fund scheme till they reach 40.

This way they will have some money and together can start a small organization. However, when you are young saving and investing does not look a great idea.

Instead we want to enjoy and spend our money in buying luxury items, branded clothes, or may be in some other thing which we can’t discuss here?. It really takes efforts and patience to save and invest and very few people able to do it.

Mostly we are habitual of instant gratification, But those who do it will live better financial life afterwards. Coming back to these three friends Krishna was determined about his business and he started a monthly SIP in a mutual fund scheme with Rs.3000.

Time passed both Dani & kuldeep were busy in their own life, when they reached 30’s one day krishna asked them about their future plan and their savings, dani and kuldeep told their respective situations or say excuses and why they did not started.

Dani realized as most youngster only realize when they either reach their 30’s or in late 30’s, he has to start saving and investing, krishna told him about his SIP of Rs.3000 a month.

Dani thought alright I am late but I can invest more than what krishna is investing so he started investing with Rs.4000.

After 5 Years passed Krishna again pointed them about their future business and plans, dani said oh don’t worry I too started it 5 years back and its even more than what you are investing.

Kuldeep standing nearby felt ashamed for a while and said sorry to both, he promised he will be investing now and much more than both. Kuldeep started Monthly SIP of Rs.7000.

When time came and they reach 40’s all of them decided to withdraw their respective investment and use it to start their dream company.

Keeping above calculation of their investment with time period (years) and taking an average of 12% returns on their investments, below image represent the same:


SIP Calculator Monthly Lumsump With Inflation- Calculate In 3 Easy Steps


Below graph shows you the complete picture:


Why Invest In SIP?


Wooh, Even after investing more than dani and krishna kuldeep left far behind, if you see the total invested amount for all, it is only difference of Rs.60,000 but the amount received at the end to all of them have major difference.

This is what is called as power of compounding the early you start investing the more beneficial it is for you. I hope this gas clear your doubt now on why need to invest in SIP’s.

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How to Invest In Mutual Fund Scheme?

The most simplest way to start investing in a mutual fund scheme is through a stock broker it is because there won’t be any commission involved as it is a direct way to invest.

Which means that you don’t have to pay up to 1.5% and 1% every year commission to the distributor/platform where you purchased the fund. These % commissions over a longer period of time compound and can become significantly big.

The mutual fund distributor is like the middleman between the AMC and the investor. If a mutual fund distributor approaches you and sells you a mutual fund, then he is selling you a ‘regular plan’, which means he is entitled to receive a commission from the AMC for selling this fund to you. There is nothing wrong with this, except that the money is going from your pocket.

On the other hand, in direct plan you don’t need to buy the fund via a distributor. If you know which fund to buy, capable of doing your mutual fund research (which by the way is the end objective of this module), then you can buy that fund directly from the AMC. When you buy directly from the AMC, then there is no distributor involved; hence the distributor commissions are not paid, which means you save on commissions, which naturally means a better return on your investment.

There are many good stock broker who offers dedicated platform to make investment in mutual fund scheme such as Zerodha, Upstox, Dhan, ICICIDirect, Fyers, 5Paisa etc.

If you do not have account with them than just open a trading and demat account and start your investment journey.

As an example below I have used Upstox mutual fund investment platform to show you how to start investing in a mutual fund scheme, take a look :-


How to Invest In Mutual Fund Scheme?


As you can see in above image there are many different schemes run by different AMC’s now the three very important things are mentioned just next to the name of the scheme:

  1. Average Returns in last 5 year
  2. Expense Ratio – Investment in Mutual fund is not free at all and hence there is a fee applicable. The applicable fee is called the ‘Total Expense Ratio’ or simply the expense ratio. The expense ratio is expressed as an annual percentage charged and it is charged when you sell the mutual fund. So the lesser it is the higher are returns.
  3. Assets under management (AUM) –  AUM is the total market value of the investments that a person or entity handles on behalf of investors. AUM fluctuates daily, AUM and fund size matter only in certain categories of funds. A fund with a large AUM signifies higher participation from investors and a fund with low AUM signifies lower interest in that fund.

So before a mutual fund scheme gets launched a notional value is assigned at the start of the fund formation, which then fluctuates based on the daily investment value. In the Mutual fund world, this is called the ‘Net Asset Value’.

A mutual fund’s net asset value or NAV is one of the most important metrics. On an end of day basis, the mutual fund company does the following calculations –

  • The value of all the investments
  • Expenses of running the mutual fund

Based on these two parameters, the NAV of a fund is estimated daily. The formula to calculate the NAV is –

NAV = (Value of all the assets – the expenses)/number of shares (units)

  • The NAV that is declared is post expense ratio deduction for a given fund.
  • Keep in mind that expense ratio for the direct plan is lesser compared to the regular plan.
  • The NAV for the regular plan is always lesser compared to the direct plan.


types of mutual funds


Above image shows you the fund manager have invested the money in which sectors as well as the particular stock. You can also see the name of the fund manager and the total experience he/she holds managing the funds.


mutual fund calculator


Above image guide you about the overall mutual fund scheme details :

  1. Fund Started – Date since the fund has been released by fund house to the public.
  2. Exit Load – The percentage charged on your withdrawal.
  3. Expense Ratio – The amount you will be charged when you sell this mutual fund
  4. Lock In Period – The period after which the investment can be redeemed or withdrawn.
  5. Lat Dividend Payout – The amount that was last paid out as dividend.
  6. Benchmark – The indexes against which this fund’s performance is measured.

Anther important thing to keep in mind is that “Past performance does not guarantee the future returns” so when you choose the mutual fund scheme do not only look at the returns instead also check the current macroeconomics as well as the individual stocks specially in which the weightage has been given more by the fund manager.

Now if you are a newbie than I would suggest you to make an investment in Equity Linked Saving Schemes (ELSS), which is widely known as tax saving mutual funds, basically ELSS are equity oriented mutual funds. As the as major part of the assets are allocated to equities, a part of the corpus is also invested in debt instruments.

As per the SEBI regulations, ELSS funds have to invest at least 80% of their corpus in equity or equity related instruments.

ELSS falls under the category of ‘High Risk with High Returns’. These funds come with a lock in period of 3 years and qualify for tax deduction under Section 80C.

Investments in ELSS of up to Rs 1.5 lakh per financial year can be claimed as tax deduction under this Section. These schemes are also sponsored by the Government of India (GOI) to promote a habit of long-term investment among masses.

One can make a investment in ELSS funds either through systematic investment plan (SIP) every month or even through a lumpsum (one time) investment with as low as Rs.500.

ELSS is an open-ended Equity Mutual Fund that not only is great for tax saving purposes but also creates a growth opportunity for your investment.

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What is Rupee Cost Averaging in mutual fund?

Rupee cost averaging is a concept which allows an investor to take advantage of the market volatility. By investing in a mutual fund through a SIP an investor gets more units when the Net Asset Value (NAV) is less and less units when the NAV is high. This brings down the average cost of the units over the long term.


Which is a better way to invest in a mutual fund scheme Monthly SIP or Lump Sum?

Monthly SIP is better because of the “Rupee Cost Averaging factor”. Rupee Cost Averaging allows an investor to take advantage of the stock market volatility.

Through investing in a SIP, as an investor you will get more units when the Net Asset Value (NAV) is less and less units when the NAV is high. Which brings down the average cost of the all units over the long term investment.

Having said that Lumpsum SIP has its own advantage if you are buying it at the right time in right fund and when the Net Asset Value (NAV) is less which means you will have more units at a particular price and in long duration the NAV will be higher creating a bigger profit.

Other things with lump sum SIP is, there is no headache for every month keeping certain money in your account to maintain the SIP.

Top up SIP is a facility which allows an investor to increase the amount of SIP instalments by a fixed amount at pre-determined intervals.

Top up SIP is a facility in which an investor can increase the amount of SIP instalments by a fixed amount at pre-determined intervals whereas SIP is a facility in which a fixed amount is invested at pre-determined intervals.


When is the best time to invest in mutual fund?

There is no such thing as best time to invest the earlier you do the best results you will get. Having said that you should invest in a good fund when the NAV is low.

This may happen when there is some kind of bad news floating around (like coronavirus, war, political turmoil etc.), this does have a huge impact on market and if you are investing for long term horizon than you do need to worry about the short term volatility in the market, things will get sorted till that time.


How Inflation Impacts Mutual Fund Returns?

Many investors who invest money in a mutual fund scheme through SIP’S whether lumpsum or monthly, does not count the rate of inflation.

Most first time investor miss this point, they only think, ok this will be the amount I would be getting at the end of my mutual fund scheme.

However, with time the value of money changes, what I means to say the value of Rs.100 after 25 Years would not be the same.

Due to inflation the prices or goods of any economy or country increase over a period of time. Hence you should account inflation while calculating your SIP returns.

To account inflation in your future value investments either drop the expected rate of return on investment, for example, if you are expecting 15% return on your investment you need to subtract the inflation rate for same period.

So, let say the average inflation for last 5 years is 3.5% so instead of taking 15% expected return, you count your return on 12.5%. You can get the inflation rate from here for India.

To find the real interest rate, we take the nominal interest rate and subtract the inflation rate.

Real interest ratenominal interest rate − inflation rate.

However the above method to calculate the inflation is the basic estimation, as inflation and returns compound the correct way or formula to calculate inflation adjusted return is given below:

Inflation-adjusted return = (1 + Return) / (1 + Inflation) – 1 

Applying the formula by using above no.

(1+15%)/(1+3.5%)-1= 11.11%, this is correct return you should expect on your investment post inflation.

Check out the below image to understand how inflation make a great impact even on your investments across different financial instruments such as Stock market (Equity), Mutual funds, FD, RD, Commodity & even real estate.


How To Calculate Inflation Adjusted Return or Real Return?

One need to understand “time value of money” as money loses its value over time, investing becomes important. Investing make sure a sustainable economic growth of a country and overall.

Therefore as an normal person or an investor you should know the (TMV) “time value of money” the value of money does not remain the same across time.

Meaning, the value of Rs.10000 today is not really Rs.10000 3 years from now. Oppositely, the value of Rs.10000 3 years from now is not really Rs.10000 as of today.

Whenever there is motion of time, there is an element of opportunity. Money has to be accounted or adjusted for that opportunity as in case inflation is that element.

Therefore it is very much important for you to make investments in mutual funds schemes

Checkout the impact of inflation on your returns as well as your life using moneycontain inflation rate calculator and calculate your future expenses easily.

At the same time there is another method or concept called present value or discounting, this helps you in knowing the (PV) present value of your future investments.

Calculate the present value of your future investment using moneycontain present value calculator.

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What is the one thing that you want when you get old? Time, so that you can correct and reverse the mistakes you did in past.

Time is equal for all of us on this planet at least? The more you invest your present time in right direction and decision, better will be your future.

Do start investing today, if you are not because the people who wait for right time, it does not come simply.

Another point which I would like to mention is that emotion always ruling the minds of most investors, especially equity investors. Handling human behaviour become hard at times. In this situation you need to ask few questions to yourself :

What are my goals? Retirement, children education, marriage, House etc.

How much money do I need & when? When do you want these money you invested, time horizon. Avoid trying to time the equity markets, you will never succeed .

How much risk can I take? Your risk taking ability makes important changes in your investing style .

Where should I invest? This is one of the most important question, you can invest in different Mutual funds, SIP’s ,Debt fund, fixed deposits, Bonds or Equity. We know the maximum returns are provided in equity market but one should be aware of different aspects while investing.

Successful investing is a journey, not a one-time event. Prepare yourself as if you were going on a long trip. The longer you will be in game, probability of you winning it will become high. Even if you incur loss sometime do not get disheartened, with time new experience, learning develops and that’s how one becomes mature.

Hence, avoid making radical changes to your portfolio based on some big story you heard on the evening news or a hot stock tip you heard from your colleague. Instead look for more better opportunities and how you can implement them.

Keep a track of your performance & see what more you can do to increase your returns. Your portfolio doesn’t care if you look at it every day instead spend your time with your family, go somewhere or learn something new.

The market is hard to predict, but one thing is certain it will be volatile for sure. You mood will swing with time and events, this is where discipline comes. At the end of the day hope for luck favor’s you.

Open Best Trading/Demat account within minutes online hassle-free paperless and start investing and trading in Stock market and mutual funds. 

Are you looking to invest in fixed deposits than do check, How Much You Can Get Monthly From Fixed Deposits. Also, see highest interest rate offering bank for fixed deposits(FD) in India.

Check out moneycontain CAGR Calculator to know your returns from investments made in mutual funds, index funds, FD, stocks, lumpsum etc.

If, you have liked the content please do share it with your friends or on social media, as sharing do bring the good karma. If you have any questions or feedback you can leave them in comment box below.

Note: Please do not take this as any recommendation, to trade or invest. This is just for reference, to make you understand more about the Mutual Fund Calculator With inflation and its importance, under no circumstances intended to be used or considered as financial or investment advice, a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset.

Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only. All investments are subject to risks, which should be considered prior to making any investments.

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