Lumpsum Calculator

SIP
One time
Total Investment
₹0
Expected return rate (p.a)
0%
Time period (Y)
0Y

Lumpsum Calculator

Understanding mutual fund investments can be a challenge for a novice investor. It takes a bit of effort to understand its various aspects, such as how to invest and when, and how much one should invest based on your risk profile and goals.

It is important to learn what type of investment options are available, and how to calculate the estimated returns on your investment.

You can invest in mutual funds in two ways - a lumpsum investment, or an SIP. When you invest a specific amount in a mutual fund in one go, it is called a lumpsum investment. A Lumpsum investment is different from a SIP (Systematic Investment Plan), the latter involves recurrent payments, which can be made monthly, quarterly, or yearly. A Lumpsum calculator uses a formula to compute the estimated ROI (Return on Investment). 

What is Lumpsum Investment?

A Lumpsum investment is a popular method to invest in financial instruments such as equity, life insurance, mutual funds, and fixed deposits, among others. The investment of a large chunk of money in a financial instrument all at once, as opposed to several smaller payments, is known as a Lumpsum investment.

Investing with a Lumpsum is a popular strategy amongst individuals who get a bonus at the end of the financial year. It is a good method of long-term investment. An investor with a high risk appetite may wish to invest a large sum in a mutual fund scheme.

You must still invest in accordance with your financial objectives, risk tolerance, and time horizon. One-time investments are inappropriate for short-term investments. If you lack confidence in your ability to manage significant sums of money, you may choose a systematic investment plan (SIP) that staggers investments over time. It helps you ride the market volatility. The decision to invest a large sum of money depends on the requirement for funds. 

Use Kuvera’s Lumpsum Calculator to know the value of your isnvestment at the end of a certain tenure when you make a Lumpsum investment in any mutual fund.

What is a Lumpsum Calculator?

Before investing in a mutual fund, it is imperative to calculate the estimated returns on the total investment for a particular period. A lumpsum calculator helps you determine the maturity value of the net amount invested in a mutual fund.

Kuvera’s Lumpsum calculator is a free online tool that automatically calculates the maturity amount for a given lumpsum investment, expected rate of return and investment period.

The process is quite simple. Enter the investment amount, expected return rate, and investment period. The lumpsum return calculator will show the estimated rate of return based on the total amount invested.  

Formula to Calculate Lumpsum Returns 

A lumpsum investment calculator uses a formula to compute the estimated return on investment. It is basically a compound interest formula:

A = P (1 + r/n) ^ nt

where 'A' is the estimated return, 'P' is the present value, 'r' is the rate of return, 't' is the duration of investment, and 'n' is the number of compounded interests in a year.

Let's understand this with the help of an example: 

If you are investing INR 45 lakhs in a fund assuring you a 12% return for 5 years, compounding every 6 month, then using the above formula: 

A = 10,00,000 (1+ 12%) ^ 5 

It is a complex equation that is not easy to understand for most investors. A lumpsum calculator solves this equation within seconds and calculates the estimated return on investment, which will be INR 7,62,342 and total value of your investment after 5 years will be INR 17,62,342.

What are the Differences Between Mutual Fund Lumpsum Investments and SIP? 

The major difference between lumpsum investments and SIP is the cash flow. 

A Lumpsum is an all-at-once large chunk investment, whereas a systematic investment plan (SIP) makes periodic, spaced-out investments. Typically, in a rising market, a Lumpsum investment strategy using mutual funds typically performs well. On the other hand, because a SIP investment averages the cost of the units over time, one should not worry about market conditions. Depending on one's investing goals, one can invest in mutual funds via SIP or Lumpsum. The question is which investment option to choose and what are the benefits and drawbacks of each of these options.

When Should You Opt for a SIP?

Investors in mutual funds can invest a smaller, predetermined amount periodically under the Systematic Investment Plan. One can also begin investing in SIPs with a one-time investment plan and then continuing only with periodic investments. 

Being an investor, you must keep the following aspects of a SIP in mind before you choose a recurring payment plan: 

1. The average investment cost decreases because the investment is carried out over time. As a result, economic uncertainty has the slightest impact on mutual fund investments made through SIP in the long term.

2. The SIP contribution is routinely withdrawn from your bank account and invested in the mutual fund plan. SIP, therefore, promotes a disciplined investing attitude. 

3. SIP reduces the overall cost of investing because you get extra units when the market drops. As a result, the probability of long-term earnings is more substantial. 

4. An SIP can be paused or temporarily suspended, or you can withdraw a part or full amount of the investment in SIP. To invest in mutual funds, one can choose a sum as low as INR 500 to invest monthly.

SIP vs Lumpsum

Parameter lumpsum SIP
Number of investments One-time Periodically which may be fixed or variable
Investment horizon Depends on your financial goals/investment objectives and the market volatility index Depends on your financial goals/investment objectives but is somewhat immune to the market volatility in the long run.
Investment cost Requires high one-time investment One can invest in SIPs with a nominal amount of INR 500
Average costs An Investor does not get a chance to avail of any benefit of rupee cost averaging As no one can accurately time the market, investors pouring their money into SIPs enjoy the advantage of rupee cost averaging by purchasing funds at different market cycles.

Benefits of Lumpsum Calculator

An experienced investor will always check if the particular investment matches their financial goal at the end of the term. The lumpsum calculator is the best option to calculate the estimated returns. 

There are many advantages to using a lumpsum calculator:-

  • It provides the investor with details of the estimated return within seconds. 

  • You can acquire a general notion of an investing strategy using an assessment through an investment calculator. However, because the conclusion depends on market conditions, it won't offer precise findings in the case of mutual funds.

  • It is a time-saving tool since, as you are aware, technology simplifies everything and spares you the time and labour of performing calculations by hand.

  • It makes it easy to plan for various investment objectives based on expected returns.

  • When a person understands their future earnings, they become prudent in  managing their overall resources and select an appropriate investment option.

  • The lumpsum calculator facilitates investors in selecting and comparing  mutual fund schemes that help them reap maximum returns beating inflation.

However, it is important to understand that the returns calculated are only an estimation. A mutual fund is subject to market risks, and the actual returns may be different from the calculated return.

What Is CAGR? How Does a CAGR Calculator Help?

The term CAGR (Compound Annual Growth Rate) describes the average yearly growth of an investment over a given time period. A lumpsum CAGR calculator is a helpful tool to calculate the compound annual growth rate of the investment over the years. To calculate CAGR, you must supply the following information:

  • Initial investment amount

  • Ending investment amount

  • Duration of investment

Calculator computes the data and produces the result instantaneously.

Features of Lumpsum Investment 

1. Minimum Investment Amount

Although a lumpsum investment is simple and does not have typical terms and conditions, most mutual funds have a minimum requirement of INR 5,000. However, following the first lumpsum investment, you can typically continue to invest in the same scheme in multiples of INR 1,000.

2. Planning Horizon

A lumpsum mutual fund investment can be held for a prolonged period. You can invest money in a debt or a liquid fund if you want to make short-term profits while maintaining liquidity or invest during a major correction after consulting your financial advisor.

3. Stock Market Volatility

A lumpsum investment is affected by stock market volatility. When the stock market falls, your investments could also suffer. Putting all your money into a single stock can also amplify your returns if the market shows bullish sentiments. However, it is not suitable to put all your money in one basket, diversification and long-term financial planning is essential. We, at Kuvera aid you to make a sound decision as per multiple investment goals such as marriage, education, retirement, etc.

Conclusion

The stock market may always remain volatile amid the uncertainty in earning growth and tightening in liquidity. Some investors believe that investing large sums in one go may not be a good idea. However, others believe that making a lumpsum investment in a mutual fund will lead to higher returns. 

Only if you understand the concept of risk management, have sound financial expertise, clear financial vision as per your experience, and are willing to stay invested for the long-term,  you may consider Lumpsum investments. One of the best and simplest ways to use a lumpsum calculator and calculate the return on investment is by signing up for Kuvera. 

Kuvera offers an intuitive lumpsum calculator and helps you find the best SIP and mutual fund plans to yield maximum returns!

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