Mutual fund investments comprise two approaches. This entails lump sum investments or investing through a systematic investment plan. One-time payment enables you to make large capital outlays over lump sum investments. Such payments do not involve the regular intervals that are characteristic of SIPs. Investors are the ones who make lump sum or bulk sum investments.
Lumpsum investment is a kind of mutual fund investment online that also provides the opportunity to take advantage of the power of compounding. This yields potentially stable rates of return than investors would otherwise earn while making sporadic investments. This blog will discuss everything about a lump sum investment calculator and why it may be of great help.
What is a lump sum calculator?
A compound interest formula for calculating the worth of your investment is offered by a lump sum investment calculator. Lumpsum investment generates decent return potential over the long term. In addition, a lump sum calculator will only require three basic details (Investment amount, Expected rate of return P.A., Tenure) to determine the current value of your investment in the future.
Sometimes people confuse it with an SIP Calculator and may even call it the Lump Sum SIP Calculator. Nevertheless, the precise term should be called lump sum calculator. However, if you are investing in Mutual Funds through SIPs, then you have to use a sip investment Calculator to determine your average investment.
What does a lumpsum calculator do?
The lump-sum calculator is one of the many such calculators that are found on the internet today. Users may benefit in the following ways:
- Get an idea of the future value of investments:
For those who wish to determine the future value of lump-sum investments, the process is very time-consuming. Rather with just a few mouse clicks on the lumpsum Mutual Funds Calculator, users are able to easily compute the anticipated value at maturity of their investment.
- Select a suitable tenure:
Once you decide on an investment amount, you may then change the lump sum calculator’s period to get the results. An appropriate tenure enables you to plan for a better investment.
- Align investment to financial goals:
Using an adjusted input value via a lump sum mutual fund calculator, users may turn investments toward their financial goals.
How does a lump sum calculator work?
A lump sum calculator is a highly advanced but very simple piece of tool for finding out your returns on various mutual funds. Using just three inputs, this tool quickly calculates compound interest returns. You can adjust the figures or slide the bars to see how changes in the amount, term, and interest rates affect the total return. You can also modify the input values to match your desired rates of return.
A lump sum calculator will help you predict the present worth of your investment made in mutual funds, in the future. It makes complicated compound interest calculations with merely 3 inputs and within seconds provides an approximate amount of expected investment value. All you need here is to adjust the numbers that appear in these indicated spaces. This is being done by shifting the slider as you monitor how the yields change once the amount, period, and interest rates change.
The procedure for using a lump sum calculator.
Here are the three basic steps to use a lump sum calculator:
Step 1: Key in the capital allocated towards mutual funds.
Step 2: Enter the desired future period in years for the estimated future value. This varies from one year up to thirty years.
Step 3: Provide the expected rate of return. This may be another small value, ranging between 1 and 30%.
After providing all this information, the lump sum investment calculator provides an approximate amount for your money.
Conclusion
The lump sum investment calculator is fast, yet offers a useful approach for computing anticipated returns from one such input. The calculator is designed in a user-friendly manner enabling users to enter an initial expected interest rate and the duration after which they make their decisions. This is an important tool in measuring the growth of lump sum investments as well as improving financial policies.
Disclaimer: Mutual fund investments are subject to market risks, read all scheme related documents carefully.
