By Tory Vance
You will encounter two fund allocation options whenever you opt for a mutual fund investment. They are the systematic investment plan (SIP) and the lump sum mode. Under the lump sum mode, you pay the investment amount in full. SIPs, on the other hand, work differently. Regardless of investment mode, mutual fund investments have one purpose, i.e., wealth accumulation. For the lump sum mode, you can use a lump sum calculator.
What is a lump sum calculator?
A lumpsum calculator helps you calculate the returns you might earn by investing in mutual funds over time. A lumpsum calculator works on a compound interest formula. Here is the formula you can use for calculating lump sum returns:
A = P (1+r/n) ^ nt
Here:
A: Estimated Return
P: Present Value
r: Rate of Return
t: Duration of Investment
n: The number of compounded interests earned in a year
So, by investing ₹25,00,000 for 20 years at a 12.5% interest rate, you will accumulate ₹ 2,63,62,735.
How to use an online lump sum calculator?
Using an online lump sum calculator is easy and accessible. After typing ‘lump sum calculator’ on the search bar, click on one of the many links on the SERP (search engine result pages). Once you have entered the page, enter basic investment details. The investment amount, duration of your investments, and the interest rate are some of the investment details. After entering the investment details, the lump sum calculator will show you the returns you’ll earn at the end of the tenure.
What are the benefits of lump sum calculators?
Here are some advantages that are associated with a lump sum calculator:
- Reasonably accurate:
Please note that these calculators will provide a rough idea of the returns you may earn. That’s because mutual fund performance and returns rely on unpredictable market movements. However, you use this rough estimate to plan your finances.
- Quick answers:
Online mutual fund calculators have replaced offline calculators and manual calculations. Just enter basic investment details, and you will get an estimate of the returns in just seconds. Instant answers are one of the best features of mutual fund calculators.
- Easy accessibility:
Online calculators are freely accessible. To use a lumpsum calculator, type ‘lump sum calculator’ on the search bar. Once you find one, enter your investment details, and you will get your answers instantly. Moreover, you can use these calculators countless times without paying anything.
- No restrictions:
Online mutual fund calculators are available round-the-clock, meaning you are not dependent on external factors like time to plan your investments. You could use these calculators even at midnight.
Conclusion:
A lumpsum calculator computes the expected returns on your lumpsum investments in mutual funds. With the help of a lumpsum calculator, you will get an estimate of the amount you will receive upon maturity. By using this calculator, you can easily plan your finances.
To know more visit https://mf.nipponindiaim.com/knowledge-center/tools/lumpsum-calculator.
