The interest earned on a mutual fund investment of 1 lakh rupees is not a fixed amount like a traditional bank deposit. Instead, it's determined by the fund's performance, which can fluctuate depending on factors like market conditions and the underlying investments.
Here are some key points to consider:
- Mutual funds don't offer fixed interest: Unlike bank fixed deposits, mutual funds don't provide a guaranteed rate of return. Instead, the returns are based on the fund's performance.
- Returns are represented as appreciation: You won't receive interest payments; instead, your investment will appreciate or depreciate in value depending on the fund's performance.
- Investment growth is measured as return: The return on investment (ROI) is calculated as the percentage change in the investment value over a specific period. This can vary significantly depending on the fund's strategy, market conditions, and overall risk profile.
For example, if a mutual fund grows from 1 lakh rupees to 1.2 lakhs in a year, your ROI would be 20%.
While it's impossible to predict the exact interest, it's crucial to choose funds carefully based on your investment goals, risk tolerance, and time horizon.
