Many people turn to Mutual Funds to build their wealth. When investing in them, you get two investment options: SIP (Systematic Investment Plan) and Lump Sum Investments. The latter involves investing a large sum of money in one go in an investment channel. It serves as a feasible option when you have excess investible capital.
However, before you opt for it, you need to make specific calculations. This is when a Lumpsum Calculator comes in handy. It is a helpful tool that guides you in organising and making sound decisions about your Lumpsum Investments.
Here are some essential things to know about it:
What is a Lumpsum Calculator?
A Lumpsum Calculator is an online financial planning tool. It estimates your future returns and the appropriate repayment amount for your existing loans. However, you can also use it to assess your investment decisions and make an informed call on the same.
To compute accurate values, the calculator uses a mathematical formula. Let us take an example of a Mutual Fund Investment where you would like to estimate the returns. In this case, the formula would be:
(Current investment amount) x (the annual return rate ÷ investment tenure in years) + (the annual compound interest rate x investment tenure in years).
Benefits of using a Lumpsum Calculator
Using the calculator has many benefits. Besides the apparent convenience, here are some of the others:
- Ease in decision-making
Whether investments or loans, you need to make the right moves. However, the same requires forethought and extensive calculations. By using the calculator, you get to pre-evaluate your decisions. It assists you in making well-informed decisions more effectively.
- Accuracy
A Lumpsum Calculator provides you with the final numeric output of your investment. It saves you from errors related to manual calculations. As long you enter the correct details, you get accurate results instantly. You can also estimate the returns of your existing Lumpsum Mutual Fund Investments without any hassle.
- Corpus size estimation
Mutual Funds come with their own set of market-linked risks. This further affects your returns, making it difficult for you to assess the size of your corpus upon maturity. In such cases, you can use the calculator for clarity. It provides the closest possible estimates of your future corpus based on the years of compounding you provide.
- Easy to use
You need not be an investment expert or mathematician to use the tool. You only need to enter the key data points specified in the tabs. Once done, the calculator automatically gives you the results within no time. Considering this, even first-time investors can avail of it.
- Free of cost
The most beneficial aspect of the calculator is that it is free of any charges. Most Mutual Fund providers offer it on their websites and apps as a complimentary service. This way, anyone may use it when required. It is readily available to everyone interested in investing.
