Everything you must know about a lumpsum calculator

If you wish to invest in mutual funds the conventional way, you can consider investing a lumpsum in your chosen mutual fund scheme to see your money grow over long term. While many investors like to invest in mutual funds using a Systematic Investment Plan (SIP), a one-time investment continues to hold its charm for some individuals. This is because, by investing a large sum of money upfront, investors can benefit more from the power of compounding, which can potentially help them get better returns compared to investing smaller amounts over time.
Be it lumpsum or SIP, wouldn’t it be nice to know the expected return from your investment? That’s where an SIP calculator and a lumpsum calculator helps you in this quest. Here, we have elaborated on the various aspects of a lumpsum calculator. Read on to know more.

What is a lumpsum calculator?

A lumpsum mutual fund calculator is a tool that enables you to compute the estimated value from your investment using a compound interest formula. The power of compounding in lumpsum investment can help in getting relatively better returns over the long term. To use a lumpsum calculator, all you need to do is enter the total investment, the expected return rate, and the investment horizon to see the future value of your investment at the click of a button.
Some people confuse it with the SIP calculator or even wrongly refer to it as the lumpsum SIP calculator. However, the correct term is lumpsum calculator. In contrast, if you are investing in mutual funds using an SIP, then you must use an SIP calculator to know your estimated investment value.

How can a lumpsum calculator help you?

The lumpsum calculator is one of the many mutual fund calculators available online these days. It can help you in these ways:

• Know the expected returns: Mutual fund calculations can be time-consuming if you carry them out manually. A lumpsum calculator helps you know the estimated future value of your investment instantly with a few clicks.
• Pick a suitable tenure: Once you have decided on the investment amount, you can change the tenure in the lumpsum calculator to get the outcome. Finding a suitable tenure can help you plan your investment.
• Align investment to financial goals: The best thing about using a lumpsum calculator is that you can change the input values to sync your investment with your financial goals.

How does lumpsum mutual fund calculator work?

A lumpsum calculator is a sophisticated yet very easy to use tool that helps you estimate your mutual fund returns. With just three inputs, it makes complex compound interest calculations in a matter of seconds to compute the expected returns. You can change the numbers in the designated slots or move the slider to see how your returns change with the different values for amount/tenure/interest rate. Moreover, you can keep modifying the input values to adjust the expected returns to your desire.

How to use a lumpsum calculator?

• Step 1: Enter the total amount invested in mutual fund.
• Step 2: Enter the duration in years for which you want to see the estimated return. It can range anywhere from 1 year to 30 years.
• Step 3: Enter the expected rate of return. This value can also range from 1% to 30%. Once you enter these details, the lumpsum calculator will give you the estimated value of your investment.

Advantages of using a lumpsum calculator

Now that you know how to use a lumpsum calculator, let’s discuss some of the benefits of using it:

• Ease of use: Since a lumpsum calculator is a free tool available online, you can easily use it anytime and anywhere to know your estimated value from mutual fund investments.
• Get the closest estimate: The returns from mutual fund investments are not fixed because of the dependency on market movements. The lumpsum calculator gives you get the possible estimate of your investment value.
• Plan Your Investment: There is no limit or charge on how many times you can change the values in the lumpsum calculator to get the desired results. This can help you plan your investment and help you achieve your financial goals.

Let’s say you have Rs.10 lakh and want to buy a car worth Rs.12 lakh without taking a loan. So, you wish to invest the money in mutual funds to buy the car with a full down payment. You want to put an estimated rate of 11% in this investment. Now, you can input these values in the lumpsum calculator and adjust the time period. You will find that you will get Rs.12.32 lakh from this investment in 2 years. This way, the lumpsum calculator can also help you decide your investment horizon.

To further enhance your understanding of compounding, you can use a compound interest calculator. This tool allows you to see how interest earned on your initial investment, when reinvested, earns further interest. This gives you a clearer picture of how reinvested returns can significantly boost your overall investment growth, helping you make more informed decisions about your financial future. A compound interest calculator can be especially useful when planning investments in bank deposits and other avenues that offer a fixed interest rate. Additionally, a compound interest calculator also allows you to try different compounding intervals (monthly, quarterly, annually etc).

Conclusion:

A lumpsum mutual fund calculator is an online tool that can help you calculate the potential value on a lumpsum investment in a mutual fund. It takes into account the initial investment amount, the expected rate of return, the investment horizon, and other relevant factors to provide an estimate of the potential investment value. For example, you can use the Bajaj AMC lumpsum calculator for planning your mutual fund investments. However, please note that the calculator just provides an estimate based on the numbers entered by the user. Actual performance would depend on various factors like market movements, duration of investment held etc. So, there is no assurance or certainty of the estimated rate of return being achieved.

FAQs:

What is the difference between SIP and lumpsum?

The key difference between SIP and lumpsum is the frequency and amount of investment. SIP involves investing a fixed amount at regular intervals, while lumpsum involves investing a large amount at a go. Investors should choose based on their investment goals and risk tolerance.

When should one prefer lump sum investment?

Lumpsum investments can be preferred when investors have a large sum of money available and wish to benefit from the potential for higher returns over the long term.

How do I invest in lumpsum?

To invest in lumpsum, investors can choose the mutual fund of their choice and make a one-time investment through various channels such as the distributor, online platforms, or the fund house.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. This document should not be treated as endorsement of the views/opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.