Lumpsum calculator is a tool that allows you to calculate the estimated returns on your lump sum investment. Using this calculator helps you to make informed decisions. In this article, we are going to learn about the SIP lumpsum calculator, how to use lump sum calculator, example of using a lump sum calculator and things to consider when doing any investment.
How to use a lumpsum calculator?
- Enter the amount you plan to invest initially as a lump sum in the mutual funds. This could be any amount you choose.
- Specify the duration you intend to stay invested in the mutual fund.
- Provide the expected annual return rate for the mutual fund investment. This estimates the average percentage return you anticipate earning annually from the investment.
- Click the “Calculate” or “Calculate Returns” button to compute the expected results.
- The lumpsum calculator will generate the results based on your input. It will display the invested amount, wealth gained, and the expected total amount after the investment period.
- Evaluate the results to understand the potential returns on your lumpsum investment. Consider the wealth gained and the expected total amount to gauge the growth of your investment over the specified period.
Example of using a lump sum calculator
- Initial Investment: ₹100,000
- Investment Period: 10 years
- Expected Return: 12%
Based on these inputs, the lumpsum calculator provides the following results:
- Invested Amount: ₹100,000
- Wealth Gained: ₹210,583
- Expected Amount: ₹310,583
This means that if you invest ₹100,000 as a lumpsum investment in a mutual fund with an expected annual return of 12% and hold the investment for ten years, you can expect your investment to grow to ₹310,583. The wealth gained, the total return on your investment, is ₹210,583.
Benefits of lumpsum investment
Here are some of the benefits of lumpsum mutual fund investments:
- Lumpsum investments allow you to invest significant money in a mutual fund scheme at once. Your investment value can increase considerably if the market performs well and the mutual fund scheme generates good returns.
- Lumpsum investments are particularly suitable for investors with a long-term investment horizon ranging from 10-15 years or more. By staying invested longer, you give your investment more time to grow and potentially benefit from the power of compounding.
- Lumpsum investments provide an opportunity to capitalize on favourable market conditions. If you believe the market has corrected or is at a favourable point for investment, you can take advantage of this by making a lumpsum investment at that time.
Conclusion
It is important to keep in mind that the lumpsum calculator provides an estimate, and the actual returns may vary. So, make sure to consider your risk tolerance, investment goals, and consult with a financial advisor before making investment decisions.
