What is Lumpsum Calculator?
Mutual funds are broadly classified in two ways SIPs & Lumpsum. The lumpsum calculator helps the investor to estimate the returns that will be made by a lump sum mutual fund investment. A lump sum calculator helps to calculate the maturity amount for a given lump sum investment made today. It shows the wealth gained during the tenure of investment for the amount invested at the beginning of the period.How can a Lumpsum Calculator Help you?
A mutual fund lumpsum calculator is an easy and effective way to estimate your corpus. By simply inputting the lumpsum investment amount, duration of investment, and the estimated annual rate of return, you can get an approximate value of your investment in seconds. You can also tweak the various parameters to understand how your returns may change.Some of the advantages of using a lumpsum calculator are:
- You do not have to understand the lumpsum calculation to get a return estimate.
- It can show you your estimated value of investment within seconds. However, it is essential to note that the results provided by the lumpsum return calculator are only estimates because mutual fund investments do not provide fixed returns.
- The lumpsum calculator is a handy tool to estimate whether you can reach your financial goal with a specific mutual fund investment.
- You can use an online lumpsum calculator to estimate the value of investing in different mutual funds and then choose one that meets your needs.
How does online Lumpsum Calculator work?
The value of your lumpsum investment depends upon the market performance of investments. However, any lumpsum calculator uses the same formula to estimate returns from lumpsum investments. Dhan’s lumpsum calculator estimates your investment value using a compound interest formula.
The formula used is:
A = P (1 + r/n) ^ nt where,
A is the estimated return
P is the present value of the invested amount
r is the estimated rate of return(in %)
t = total duration of investment
n is the number of times interest is compounded in a year
For instance, taking the example mentioned above, assume invest Rs. 50,000 in a mutual fund for 7 years and you expect an average return of 12% per annum. The interest is assumed to be compounded annually.
The formula for lumpsum calculations can be used as follows:
A = ₹50,000 {(1+00.12/1)^7}
A = ₹50,000 x 2.2107
A = ₹1,10,535
Instead of using this formula to calculate lumpsum investment on your own, using an online calculator like Dhan’s lumpsum calculator, is a much simpler way of computing your investment value.
