Mutual funds are gaining popularity today in the market as an investment option due to its numerous benefits such as professional management, hassle free investing and power of compounding. Online mutual fund is the primary reason why more and more new potential investors are choosing this product to start investing their hard earned savings and let it grow in the long term. There are many ways to start mutual fund investments depending upon the need of the investors. But the 2 popular ways are investing in lumpsum, known as one-time investment and the other is systematically, known as SIP or systematic investment plan.
SIP is when one can make investments in a disciplined way in mutual fund schemes over a period of time. Opposite of SIP, is the lumpsum investment or one-time investment where you can invest a fixed amount just for one-time or if required may add more in future. But unlike SIP, there is no commitment of investing systematically or more when you make a lumpsum investment.
There are various types of returns that one can get from a lumpsum investment in mutual fund schemes: Absolute, annualised, total, trailing, point to point and rolling etc. In order to make mutual fund investment simpler, investor can use a lumpsum calculator which is freely available on the internet or on the mutual fund company websites. This calculator gives an estimate as to how much your lumpsum corpus could be after the investment period.
Let us understand how lumpsum investment works and how you can plan the same –
- Lumpsum calculator saves investors from the pain of manual calculation, thus eliminating the possibility of human errors.
- The above calculator helps investors chalk out a strategy for their lumpsum investments more efficiently as they get a tentative picture of the expected future corpus of their lumpsum investments.
- It provides investors with an almost accurate estimate. However, the exact returns/ or the amount received after the investment period will depend on the actual returns you receive from the mutual fund schemes you have invested in. Thus, the tool gives good guidance to understand an estimated figure that helps plan ahead.
- Let us try to figure out the above – Suppose, you invest an amount of Rs. 8 lakhs in a mutual fund scheme for a period of 20 years assuming the rate of return to be 10% p.a., your expected corpus in the future would be Rs 53.82 Lakhs. This calculation was done in seconds using the lumpsum calculator. As you now know the amount to be invested and the tenure, this helps you in taking an informed decision.
Since it is a popular tool in the market concerning mutual funds, investors, at times, can get confused with the terminologies, thus ending up searching for lumpsum SIP calculator or SIP lumpsum calculator. While investing for a tool to calculate your lumpsum investment returns, you need to be careful which tool exactly you are using.
There is another function that you can perform in a lumpsum calculator is to know what exactly should be the lumpsum investment amount now to reach a goal in future. For example, you need Rs 50 Lakhs to meet a goal after 15 years while expecting 11% return. In this case, you can invest only Rs 10.45 Lakhs as one-time investment. This is how easily the lumpsum calculator helps in mutual fund investments.