There are two options for mutual fund investments. They are systematic investment plans (SIP) and lump sum investments. A specific amount from your savings is deducted regularly into a mutual fund. These plans are popular because they are convenient. The lump sum is the other mode of mutual fund investment. Consider this mode if you have the required investment amount at your disposal.
What is a lump sum investment?
It is a lump sum mutual fund investment when you invest the entire amount in one go in a mutual fund scheme. Anyone can opt for the lumpsum mode. But generally, high-network individuals or HNIs invest through it. Consider a lump sum investment for windfalls like inheritance or bonus. You may enjoy profit from the lump sum investment by timing the market right. First, identify your investment goals, time horizon, and risk appetite. Afterwards, determine the investment amount by using a lump sum calculator. Sign up for the best mutual funds after determining the investment amount.
What is a lump sum calculator?
A lump sum calculator is a utility tool that will show the wealth accumulated over the long term on a lump sum mutual fund investment. Enter the investment amount, investment horizon, and the expected annual rate of return on the formula box of the lumpsum calculator. The calculator will show you the required investment amount and the possible wealth gain in seconds.
How do lumpsum calculators work?
Lumpsum calculators show you the future value of your investment. You will get the value of future returns by using the following mathematical formula:
Future value = Present value (1+ rate of interest)^ number of years
For instance, you enter ₹1,00,000 as the lumpsum amount with 20 years as the number of years. Set the expected rate of return as 10%. The answer you will get here is ₹6,72,750.
How to use a lumpsum calculator?
A lump sum calculator an online tool that can help you compute the future value of your fund allocation in seconds. Here are the steps involved in using a lumpsum calculator:
- Enter the required amount of investment
- Set the investment horizon, i.e., the number of years you want to remain invested
- Modify the expected rate of return
See? It is easy to calculate the future value of your investments.
How can a lumpsum calculator help you in making investment decisions?
These calculators can help you gauge the estimated returns on your lumpsum fund allocation. Hence, you can evaluate whether your investment option is helping you reach your financial goal. By adding details such as the investment amount, number of years, and expected rate of return, you will get the expected return you may enjoy for the entire investment period.
What are the advantages of lumpsum calculators?
Here are some of the benefits associated with a lumpsum calculator:
- Provides a rough idea:
It is not possible to accurately calculate the future returns on mutual fund investments. That’s because the market risks will impact the returns. A lumpsum calculator provides the closest possible estimate, which will help you formulate an investment plan.
- These calculators are accessible:
A lump sum calculator is an online tool. It means that the calculator is accessible 24×7. There are no constraints for using these calculators.
- They are timesaving:
These online calculators save you time and effort. The calculator provides the answer within seconds once you enter the required details. You can get use these calculators limitlessly without paying anything.
An online lumpsum calculator is easily navigable. These online calculators will give an idea of the required investment amount and the expected rate of return. Again, opt for the lumpsum investment mode if you can easily access the investment amount.