Lumpsum calculator: Know how to use an online lumpsum investment plan calculator

[ecis2016.org] A lumpsum calculator estimates your investment’s future worth at a specified rate of interest

What is a lumpsum calculator?

A lumpsum investment calculator assists investors in estimating the returns on a lumpsum investment. One simply has to enter the required information and the calculator will calculate an approximate maturity value, based on the given data.

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What is lumpsum investment?

Depositing all of the money at once is known as a lumpsum investment. If you get a windfall, such as an inheritance, bonus, or gift, you may want to think about investing the whole cash at once. For example, investing in a mutual fund, in which you put all of your money at once (a lumpsum payment), is a common practice. An investor who is willing to take on more risk, may choose to explore a lumpsum mutual fund investment.

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The lumpsum investment can pay off, if you time it correctly. You must still invest following your objectives, risk appetite and time horizon for investments. Investing a large quantity of money will depend on one’s financial situation. In the absence of a liquidity strategy, one may be forced to sell assets at a loss. For short-term investments, lumpsum investing is not the best option. If you are unsure of your ability to handle significant sums of money, a systematic investment plan (SIP) can be the best option for you.

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Lumpsum investment vs small investment

Investing in mutual funds may be done in two ways: via systematic investment plans (SIPs) or lumpsum. Let us take a closer look at these two investing strategies:

Lumpsum: Investing in large sums

An investor who makes a single, lumpsum investment is known as a lumpsum investor. Investing a significant sum of money all at once, on the other hand, can be unwise. Investing in a Systematic Transfer Plan (STP), commonly known as STP, can help investors avoid this problem.

It is possible to move a predetermined quantity of money from one fund to another using STP, an automatic transfer method. Many investors like this strategy, because they do not want to take on the danger of trying to time the market or deal with the volatility of a leveraged market. If you have a large quantity of money and want to invest in equity-oriented mutual funds, this is the investment vehicle you should go with. When the market is favourable for equity mutual fund investments, the lump sum is put in debt funds and then moved to equity funds regularly.

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SIP: Systematic Investment Plan

In SIP investments, a defined quantity of money is invested in one mutual fund plan every month by a single investor. The amount, duration of investment and frequency of investments are all decided in advance. Investors can start with as little as Rs 500, using the SIP investing strategy. Every day, weekly, bi-weekly and monthly are all options for investment frequency. This encourages the investor to save regularly and instils a feeling of fiscal responsibility in them.

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The rupee cost averaging that SIP investors enjoy, allows them to purchase more units when the price is low and less when the price is high. As a result, they can more accurately estimate the total cost of a mutual fund investment.

How does lump sum calculator work?

The lumpsum calculator has a formula box in which you can input the investment amount, the duration of the investment in years and the estimated yearly rate of return on the investment. The lumpsum calculator will then provide the predicted amount and wealth increase. Lumpsum calculators operate on the future value premise. The lumpsum calculator estimates your investment’s future worth at a specified rate of interest. It depends on the following:

• How much money you are going to put in.
• The time span throughout which you are prepared to remain invested.
• The estimated rate of return that an investor anticipates a mutual fund scheme will generate.

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How can you profit from a mutual fund lumpsum calculator?

The lumpsum calculator enables investors to assess the expected returns on their lump sum investments. Thus, a potential investor may determine whether or not the investment choice they have chosen will help them achieve their financial goals at the conclusion of the investment period.

• It calculates the projected return on investment over the full investment term. To get a near-perfect approximation, you must provide data such as the investment amount, estimated rate of return, and duration of the investment (one year, three years, etc.).
• Once investors have an approximate concept of the maturity value of their investment, it enables them to plan and manage their money more effectively.
• Using a lumpsum calculator saves time and helps prevent human mistakes while doing manual computations.
• Even beginner investors can easily utilise a lumpsum investment return calculator.

One should keep in mind that most investments are susceptible to market fluctuations. Hence, returns cannot be predicted with certainty.

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