Mutual fund lumpsum calculator
Mutual Fund Investments offer a variety of choices to investors, in terms of kind of funds to invest in, such as debt, equity, or others, time period and the amount they want to initiate the investment with. They also offer a choice in terms of how the investor wants to invest – SIP or Lumpsum. Both are popular methods of doing Mutual Fund investment, which an investor can choose based on their need and convenience.
SIP method would entail periodic investments in mutual fund schemes, over a time period. In case of Lumpsum, the investor has to make a one-time investment in the fund. Once he/she has invested, the amount grows or falls with the market situation. Every investor has a definite goal in mind, such as wedding, child education, foreign education, buying a house, etc., when they start and the same can be mapped with the investments.
If it’s an equity fund, tenure of investment should be minimum 5 years or more, in order to get good returns. Equity mutual funds are also good if you have a long term goal. In case of debt funds, the fund should be chosen based on the investment tenure.
Let us now compare SIP and Lumpsum:
- Initial Investment amount – In case of SIP, one can start investing with an amount as less as Rs. 500. On the other hand, lumpsum investments require a minimum initial amount of Rs. 1,000 or in some AMCs, it is Rs. 5,000.
- Average costs – In case of the lumpsum method, there is a one-time investment made by the investor whereas SIP leads to fund purchases during different market cycles. Hence, the cost per unit is averaged out during the total investment horizon. Since more number of units are purchased during a market low as the mutual fund NAV is low, there is compensation for purchases made during a market high. This helps to tide over market fluctuations and even out the cost. Units can then be sold when the market is performing well.
- Market monitoring – In case of lumpsum investment in mutual funds, investors need to know when they are entering the market and it is preferable if they invest during a market low. On the contrary, with SIP, an investor can enter during different market cycles and take advantage of the same. Hence, they don’t need to monitor the market as closely as in case of SIP.
In order to get more investors on board and make their investment journey a smooth ride, online calculators like lumpsum calculator are available on the internet. Suppose, one invests Rs. 5 lakhs today in a chosen mutual fund scheme for 10 years and expects 12% return per annum, the expected corpus would be more than Rs 15 lakhs. This calculation was done in seconds using the online lumpsum calculator by giving just 3 inputs – investment amount, no. of years of investment and the expected return.
Sometimes, investors get confused and search for lumpsum SIP calculator but there is no such tool available. They are separate ones – there is a mutual fund lumpsum calculator, as explained above and the SIP calculator, which helps to make accurate calculations when it comes to SIP mutual fund investments.
Financial calculators are a necessity when it comes to understanding your investing journey better. With easy tools available online, individuals can use them for getting an estimate on how to reach their financial goals in a better manner.