Mutual funds offer two routes to investments, monthly, quarterly, or yearly through SIPs or lump sum at once. Out of these, lump sum investments are one of the preferred ways of investment by investors with a considerable amount at hand, long-term investment plans, who are willing to lock in their money.
However, to make a lump sum mutual fund investment successful, you must carefully evaluate various factors, such as investment amount and time horizon. If you want to invest through a lump sum route, make sure your investment is well-planned around these factors so you can reap the best of the returns you deserve, and a lumpsum calculator can help you do that.
What Is a Lump Sum Investor?
A lumpsum calculator is a financial assistance tool that helps investors plan their lump sum investments and determine their returns from the same with just a few clicks and taps. Most lumpsum calculators are available online that require just three inputs from the users, namely investment amount, investment period, and expected rate of return, to process the results, enabling you to perform the calculations in a jiff.
Let’s use Glide Invest’s lumpsum calculator to perform the calculations.
Start by visiting the Glide invest website or downloading the app.
Click on the menu bar. Go to the tools section and select financial calculators. Then click on the lumpsum calculator.
Once you are redirected to the page, you will see three input or selection options.
First, select the investment amount you want to invest as a lump sum.
Then, select the investment period, depending on your goals. If you need more clarification about the time, choose the time frame you believe you will achieve your goals.
Select the expected rate of return a particular fund scheme is proposing.
Once done, you will be made available with the results showing how your returns will grow over time (in graphical form), along with the following numbers that will help you form a decision for your investment.
- The estimated investment value at the end of the tenure (including the investment amount).
- The total investment you are required to or will make.
- Estimated returns, excluding your investment amount
Suppose an investor has Rs 1 lakh in hand and is considering investing in a mutual fund through a lump sum. But, before investing, he wants to evaluate various available options and the wealth he can forge from them. For this, he uses a lumpsum calculator.
First, he decides the time frame for which he wants to stay invested and then the returns he expects from his investment. In this case, the time is 5 years, and the return rate is 10%. He inputs these values in the lumpsum calculator and gets the results in the form of estimated returns, Rs 61,051, and total gain, Rs 1,61,051.
This way, by trying out different input combinations relating to amount and time, you can also plan your lump sum investments.
Application of a Lumpsum Calculator
There are various ways investors can use a lumpsum calculator while they head for their investment journey with mutual funds, such as
- For simplifying complex calculations: With a lumpsum calculator, you can easily remove the complexities related to investment calculations. You don’t necessarily need to understand the lump sum calculations to plan your investments.
- For getting an estimate of your returns: A lumpsum calculator provides an estimate of your return on investment. All you need to do is to enter the required values, and you are ready with desired results. However, note that the results should only be as references, not specific. Many factors can deviate your actual returns at the end of the tenure from the ones you would get in from a lumpsum calculator, such as exit load, inflation, and more.
- For investment planning to fulfill your goals: The goals can be anything. Since the lump sum investments are meant for a long time, these goals are often related to buying a house, funding the child’s higher education or marriage, or ensuring a comfortable post-retirement life. Using a lumpsum calculator, investors can create multiple investment scenarios relating to the different time frames and then choose the one that actually works for them.
- For analyzing various fund schemes: Lumpsum calculators are one of the best tools to analyze fund schemes and choose the best among the rest. By trying different input combinations in the calculator, you can zero in on the one that actually aligns with your investment amount and time frame.
Lump-sum investment can help you create substantial wealth, provided you devote your time and experience to plan it. Utilize the power of a lumpsum calculator to simplify this task and put your hard-earned money into something fruitful and fulfilling.