An investor who wants to invest in mutual funds is offered two options – either to invest via a Systematic Investment  Plan (SIP) or via lumpsum. Under the SIP option, an investor invests a pre-determined amount at regular periods for a given time. On the other hand, lumpsum investment is when an investor deposits a significant amount of money in a particular mutual fund. Several investors prefer lumpsum investments as they have lesser variables with the potential to fetch higher returns. Just like an SIP calculator, you can use a lumpsum calculator to find out estimated returns on your mutual fund investments.

What is a lumpsum calculator?

A lumpsum calculator is a computerized tool that does all your investment math for you. It helps you calculate how much returns you can make if you stay invested in a particular mutual fund scheme investing a specified amount for a particular period at a specific annual rate of return.

How to use a lumpsum calculator?

A lumpsum calculator is quite easy to use. A lumpsum calculator generally has three input boxes. These are:

  1. Monthly investment amount
  2. Investment tenure
  3. Expected annual returns

Enter the amount you wish to invest in mutual funds via lumpsum mode. Next, you need to input the duration of your investment such as 8 years, 10 years, and so on. Though lumpsums do not have any lock-in period, mutual fund experts often advise investors to stay invested for a longer duration to achieve optimum capital appreciation. Finally, you need to input the expected rate of return on your investment.

Once you input these values correctly, click on the calculate button to understand the expected corpus that could be earned in a specific period by investing via lumpsum. Some lumpsum calculators also comprise an additional feature – ‘Adjust for Inflation’ button. You can use this to know the actual value of your investment in the future after factoring inflation. It is always advised to factor inflation as it provides a more realistic amount of your earnings.

Lumpsum investments have proven to be one of the most widely used investment vehicles, most of which have a proven history of fetching high returns. Lumpsum investments also offer you great convenience as you can invest in mutual funds online from the comfort of your home. Happy investing!


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