Is profit in mutual funds calculated as (Current NAV) / (NAV when bought) * Amount invested – Amount Invested?

The math may look simple (Value – Cost where Value = Latest NA * Units) , but look for these THREE catches to arrive at the net profit in hand! VThere is a lot hidden behind the NAVs of these mutual funds

1. Beware of Commissions: Expense Ratio includes commissions paid. If you are not invested in “Direct Plans”, then your NAV will grow slower. The profit you make will be lesser to that extent. How about ending up at 50 lakhs instead of 70 lakhs on a monthly SIP of Rs 1,000! (see illustration below)
2. Exit Loads: The MF may charge an exit load if you withdraw before the prescribed period. For equity funds it could be 1%. That will reduce the profit.
3. Taxes: Dont forget Short Term Capital Gains or Long Term Capital Gains depending on when you withdraw and which type of fund it is. It is 15%and 10% respectively for equities. For Debt funds it is added to your income for short term, and if held > 3 yrs it is taxed at 20% of inflation indexed gain.