What is lumpsum investment?
Mutual fund investments are a convenient way to mobilise one’s savings into chosen mutual fund schemes for the purpose of growth, with time. In order to practice this, one can use two available methods for the purpose of investment – SIP or lumpsum. In case of the former, periodic investments are made with small amounts to maximise savings, based on what one has at their disposal. And, in case of the latter, investor makes a one time investment, for generating compounding returns, over the investment tenure. If the investor chooses equity funds here, the time frame should ideally be a minimum of 5 years or more, and in case of debt funds, they can invest even for shorter durations depending upon the chosen category of fund. The investor tenure should depends on the risk capacity of the investor, his/her financial goal and the time horizon.
What is a lumpsum calculator?
Lumpsum calculator is a freely available online tool that helps one get an estimate return on their lumpsum investments. A quick, easy and user friendly tool, this mutual fund lumpsum calculator gives you an estimated value once you enter data such as amount to be invested, time period and the expected return. Once the investor understands this, he can make an informed investment decision in order to maximum benefits from their mutual fund investments. This is where the lumpsum calculator can play an important role for shaping up the investment decisions.
How can a lumpsum calculator help you?
In this tool, once you enter how much you would like to invest in a mutual fund scheme, the expected returns and the investment time horizon, it tells you the final expected amount once the tenure of investment is over. It is an estimated amount as mutual funds are subject to market risks and you may or may not get the expected return which you inputted in the lumpsum calculator. Therefore, only an approximation can be done, based on assumed rate of return as well as historical performance of the chosen fund or other funds in the same category. Let us understand this with a simple example –
Suppose, you invest an amount of Rs. 1 lakh in a chosen mutual fund scheme for a period of 20 years. If the rate of return is assumed to be 12% p.a., your expected future corpus would be Rs. 9,64,630. This calculation was done in seconds using the mutual fund lumpsum calculator. Thus, it helps to reduce the hassle of manual calculation as well as the possibility of human errors.
A Google search study shows that sometime the investor searches for lumpsum SIP calculator instead of lumpsum calculator or SIP calculator. Please note that there is nothing called lumpsum SIP calculator. Depending upon your investment requirement, you can either use the lumpsum calculator or the SIP calculator.
Mutual fund lumpsum calculator and an analysis on it’s fragments was the crux of this read. Investments are supported by these online tools and helps in a more comprehensive understanding of what one can expect from it.