SIP (Systematic Investment Plan) and lumpsum investments are the two most common types of mutual fund investments. While SIPs have grown in popularity over time, new investors may not understand the fundamentals of lumpsum investing. A lumpsum investment, unlike a SIP, is when an individual makes a single, independent investment in a specific programme.
What is the purpose of a lumpsum calculator?
A lumpsum calculator may be used to estimate an investor’s returns on a lumpsum investment. Simply enter the required information, and the calculator will calculate an approximate maturity value based on the information supplied.
What is the benefit of using a mutual fund lumpsum calculator?
This calculator may be used by investors to assess the expected returns on their lump-sum investments. As a result, a potential investor can determine whether or not a certain investment choice will achieve their financial objectives at the conclusion of the investment period.
Some of the advantages of employing a lumpsum calculator are as follows:
- It calculates the expected return throughout the whole investment period. To get a near-perfect approximation*, you’ll need to include data like the investment amount, estimated rate of return, and investment tenure (1 year, 3 years, etc.).
- It aids investors in better planning and managing their money once they have a rough estimate of their investment’s maturity value (s).
- Using a lumpsum calculator from 5paisa saves time and helps to eliminate human mistakes while performing manual computations.
- Even beginner investors will find it simple and straightforward to utilise a lump sum investment return calculator.
- It should be noted that because mutual fund investments are susceptible to market risks, exact returns cannot be predicted.
What is a lumpsum calculator and how does it work?
Typically, an investor must submit the following information into the tool:
- The amount of money invested
- The amount of time they are willing to commit for
- The estimated rate of return that the investor expects from a mutual fund plan.
- The lumpsum calculator will determine the maturity value of the mutual fund investment once the above inputs have been completed.
What are the pros and disadvantages of investing in a lump sum mutual fund?
These are some of the advantages of using the lumpsum investment process to invest in mutual funds:
- Putting a large amount of money into it
Investors can invest a considerable sum in a mutual fund scheme using this strategy. As a result, if the market enters a boom phase, the investment value might skyrocket.
- Long-term investments are ideal.
Lumpsum investments are a good option for people who want to invest in a mutual fund for a longer period of time, say 10-15 years.
- Investing convenience
An investor does not need to be concerned about investment deadlines or putting aside enough money each month to invest.
Conclusion
As previously indicated, an investor can invest in mutual funds using one of two methods: SIP or lumpsum. An investor that makes a lumpsum investment invests a certain amount in a single transaction. However, if you opt to invest a large sum of money all at once, you may be taking a risk. To avoid this, investors can use a Systematic Transfer Plan, often known as STP, to invest methodically over time. STP is an automatic method of transferring a pre-determined amount of money from one fund to another on a regular basis.