Overview of Lumpsum Calculator for Accurate Calculation

If you are into mutual fund investment, you might have come across the investment option named Lumpsum Investment. Mutual fund investments are broadly divided into lump sum and SIP. A lump sum investment is when an investor makes a investment of specific amount on a mutual fund plan for a certain period. On the other hand, SIPs or Systematic Investment Plans are monthly investments done in smaller sums. Each of these mutual fund investment methods has advantages of its own. 

Most investors prefer lumpsum investments since they involve fewer variables and yield higher returns. If you are new into this and want to know what ROI you may get upon specific investment, using a lumpsum investment calculator is the right option. This article gives you insight into lumpsum calculation and will answer some of the queries.

What is Lumpsum Investment?

A lumpsum investment involves investing full payment all at once. If you have enough fund with you and want to make one-time investment for a specific period on any promising mutual funds, lumpsum is the best option. Many high earning professionals prefer this type of mutual fund investment to diversify and increase their funds.

Like SIP, the lumpsum investment also requires certain planning to avoid loss or low return on investment.

What is a Lumpsum Investment Calculator?

A lumpsum investment calculator is an online tool that helps you present the estimated wealth gained on the investment over the stipulated period. The calculator has a formula box in which you enter the investment amount, the duration in years, and the anticipated annual rate of return. 

The calculator then shows you the result within seconds. However, you need to remember that the result may vary with the actual amount you will receive depending on the market condition during withdrawal.

How does the Lumpsum Calculator work?

The lumpsum calculator has a certain technique to determine the projected return on investment. There is a specific formula for the lumpsum mutual fund calculation. The mathematical formula is-

A=P(1+r/n)^nt

• A is the expected return from the lumpsum investment.
• P is the present value of the invested amount
• r is the rate of return
• t is the total investment duration
• n is the frequency of compound interest in a year

For instance, if you have invested Rs 15 lakhs with a 12% annual return for five years.

A = 15,00,000 (1 + 12%) ^5

The estimated return for the investment will be Rs 26,43,512. However, the amount and percentage may vary according to the market value of the fund. 

To get the best results, follow the below steps–

• Enter the total investment amount.
• Total years of investment duration.
• Annual projected rate of return
• You will get the estimated ROI.

What are the Benefits of Using Lumpsum Investment Calculator?

Using a lumpsum investment calculator can offer multiple benefits. Some of these are-

• Since mutual fund investments are prone to market risks, it is impossible to determine their returns precisely. You can get the most accurate estimate possible using a lumpsum calculator.
• It lets you budget your money according to the projected returns.
• You can use this tool anytime and on any device.
• The calculator gives you the result within a few seconds, saving your time.

Conclusion

In the long run, any working professional who wants to increase their wealth prefers investing in mutual funds. However, you must consider liquidity needs, tax, the risk involved and others while doing lumpsum investment. With a lumpsum investment calculator by your side, you can get the best result.

FAQs – Lumpsum Calculator