With Lumpsum calculator, you can calculate the maturity value of your investment. In other words, the Lumpsum Calculator tells the future value of your investment made today at a certain rate of interest. For example: If you invest 1 lakh rupees for 60 years at a 15% rate of interest, then according to lumpsum calculator, the future value of your investments will be mindboggling 43.8 cr. after 60 years.
What is a lumpsum calculator?
A lumpsum calculator is an online instrument designed to help you estimate the potential returns on your lumpsum mutual fund investment. When you have a considerable amount of surplus funds, instead of investing it over time in small amounts, you may want to invest the whole amount in one go. This investment process is known as lumpsum investment. An online lumpsum calculator is helpful when making such kinds of investments.
To use an online lumpsum calculator, you are required to input three key details: the amount you plan to invest in lumpsum form, the investment horizon for which you want to invest, and the expected return rate of the chosen mutual fund scheme. The calculator then uses these details to provide an estimate of the returns from your investment over a specific period.
What Is Lumpsum Investment?
It is a one-time investment that allows you to put your money in a mutual fund, allowing it to grow and compound over time. A lumpsum investment is one of the best ways to maximize your potential returns in a mutual fund and secure your financial future.
If you are considering a lumpsum investment in a mutual fund, it is wise to calculate its likely future value. It enables you to make the necessary adjustments to your investment strategies, aligning them more effectively with your financial goals. You can use an online lumpsum investment calculator to estimate the returns on your mutual fund investment.
How can a Lump sum Calculator Help You?
Mutual fund investors can use this calculator to figure out the estimated returns on their investments. Before getting into the benefits of using this calculator, one must know the types of returns for a lumpsum investment.
- Absolute return
- Total return
- Annualised return
- Point-to-point return
- Trailing return
- Rolling return
It’s paramount that an investor understands all these types of returns in detail to avail the maximum benefits from their mutual fund investments.
How Does Lumpsum Calculator Work?
Here is the formula that is used by an online lumpsum investment calculator:
Future estimated lumpsum value or FV = P* (1 + r/n) ^ (nt)
Let us understand what these variables in the formula mean
FV = Future Value
P = Principal lumpsum amount you invest at the start
r = expected annual rate of return on a compounded basis
n = Number of times the interest is compounded (example: quarterly, annually, semi-annually)
t = Tenure of the lumpsum investment
Once these figures are inputted, the online lumpsum investment calculator uses this formula to estimate the investment’s future value, giving you an idea of how much the investment could grow over a specific period.
One word of caution here. Input data in a transparent, pragmatic, and honest manner. Otherwise, the output and outcomes will be far off from one another.
SIP vs Lumpsum – Which Is Better?
SIP and lumpsum are two distinct approaches to investing in mutual fund schemes, each with its own set of benefits and drawbacks. The choice between SIP vs lump sum depends on your goals, risk tolerance level, and market understanding.
SIP allows for periodic investments, inculcating a disciplined approach towards investing. It is ideal for beginners and those with restricted funds as it permits investment in small amounts over time, mitigating the market volatility risk owing to rupee cost averaging.
In contrast, lumpsum investment refers to investing a considerable amount at once. It provides immediate market exposure, potentially resulting in higher returns during a bullish market phase. The power of compounding, wherein the whole investment amount gets more time to grow, considerably benefits lumpsum investments. However, they hold higher risks owing to their dependency on market timing.
Benefits of Using Angel One Lumpsum Calculator
The mutual fund lumpsum calculator by Angel One is an essential financial tool. The key benefits of using this calculator are as follows:
- Accurate investment planning: Angel One’s mutual fund lumpsum calculator can help you estimate the amount you need to invest to reach your financial goals within a specified time frame.
- Saves time: Calculating the ideal lump sum investment manually can be time-consuming, especially when considering compounding. Using a mutual fund lumpsum calculator automates this process and provides quick results.
- Comparative analysis: You can use Angel One’s mutual fund lumpsum calculator to compare the potential growth of different investment amounts, enabling you to make a more informed choice. Also, test different scenarios, such as changing the investment amount, adjusting the investment duration, or considering different rates of return.
- Saves you from over/under-investing: The calculator can suggest when you are over-investing or under-investing in a mutual fund, as it provides an assessment of approximately how much is needed to achieve your goals.
Lumpsum Calculator FAQs
When should one prefer Lumpsum Investment?
Ideally, any investment (whether lumpsum or SIP) should be done keeping in mind various things like current income, risk profile, age, tax constraints, liquidity needs, time frame, and certain other unique constraints. Lumpsum investment is preferred when one has a large amount of surplus funds and more importantly if he/she think that the market has majorly corrected or it won’t fall just after investing. Lumpsum investment done over a longer period helps generate a compounding rate of returns.
Are SIP and lumpsum calculators the same?
No, SIP and lumpsum calculators are not the same. A SIP calculator calculates the estimated returns on the regular investments made at fixed intervals. On the other hand, the lumpsum calculator calculates the estimated returns on a one-time investment.
Does the Lumpsum Calculator account for inflation?
This tool provides nominal future values. For real (inflation-adjusted) returns, deduct your expected inflation rate from the projected growth rate.
Can I make my decision based on this lumpsum calculator?
The most important thing to remember is that the quality of the output of any calculator is dependent on the quality of the input. You must put the inputs honestly to get the right answer. Many people may put the data that gives the results they want to see. That is not useful.
Can the lumpsum calculator show the return from a mutual fund investment?
Yes, an online lumpsum calculator can show the potential returns from mutual fund investments. By inputting the investment figure, expected return rate, and investment time frame, you can get an estimate of the investment’s future value, assisting you in understanding the potential growth of your lumpsum mutual fund investment.
