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by Shreya Paliwal Mutual Fund Financial services

Mutual Fund Investments can be broadly classified into lumpsum and Systematic Investment Plans. Lumpsum Investments are when depositors invest a significant sum in specific Mutual Funds in India. SIPs are investments in smaller amounts at regular intervals. These Mutual Fund Investment modes have their share of benefits.

Lumpsum Investments are preferred by most investors since there are lesser variables involved and returns are generally on the higher side. You can use the Mutual Fund Lumpsum Calculator to find out an estimated return on Lumpsum Investments.

How does it help?

Mutual Fund Calculators determine the estimated investment returns. Before reaping the benefits of using these calculators, you should know the type of returns you get through Lumpsum Investments:

·         Absolute returns

·         Total returns

·         Annualised returns

·         Point-to-point returns

·         Trailing returns

·         Rolling returns

Benefits

·         The Lumpsum Calculator offers an estimated return for the entire investment period. You can calculate the investments for one, three, and five years.

·         It is incredibly convenient to use them. Even a layperson can use the calculator relatively easily.

·         It offers reasonably accurate results. Note that Mutual Funds India is subject to some market risks and cannot be predicted with pinpoint accuracy.

·         It enables you to plan your budget better based on estimated returns you will most likely receive by the end of the investment period.

How to calculate Lumpsum Investment returns?

The Lumpsum Calculator uses a specific formula to compute the estimated investment returns. It is essentially a compound interest formula, with one of the variables being the number of times the interest gets compounded in a year. The formula is as follows:

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

Where,

A = estimated returns

P = present value

R = return rate

T = duration of investment

N = number of compounded interests in a year

You can use this formula to calculate the Mutual Funds returns accurately. For instance, you invest Rs. 15 lakh in a fund that provides 12% returns for five years, compounding every six months. The estimated returns in this scenario will be:

A = Rs. 15,00,000 (1 + 12%) ^ 5

It may seem like a complex equation that is not easy for investors to grasp. But the Mutual Fund Lumpsum Calculator computes it instantly. In this case, your estimated return by the end of the five years will be Rs. 26,43,513.

Final word

Lumpsum Investments are the most widely used investment methods, most of which have a time-proven record of yielding high returns. You can start investing a smaller amount and increase it gradually once you become comfortable with it.