Home » Top Benefits and working of a lumpsum calculator

# Top Benefits and working of a lumpsum calculator

Mutual funds are one of the best avenues to generate significant returns. However, this success from mutual funds boils down to what you seek from your investments and how you drive your strategies around the same.

When it comes to lump sum investments, an investment horizon holds utmost importance along with the market expertise to time the market situations. As such, the more you stay invested in mutual funds, the lesser the risks related to market fluctuations, and the better returns you are likely to generate. If you are thinking of investing in mutual funds through lump sum but unsure about the investment timeline or amount for a specific financial goal you are aiming for, a lump sum calculator is just what might help you take the lead. These tools are easy to access that help you perform complex calculations related to your lump sum investment.

## How does a lumpsum calculator work?

Lump-sum calculators focus on identifying the future value of investments, as in how your current asset would grow over some time at a particular interest rate. For this, a mathematical formula is employed as follows.

Future Value = Present Value (1+r)^n

Herein,

r represents the rate of interest

n represents the number of years

Let’s take an example to get a clear understanding of how the future value of a lump sum investment is determined using the above formula.

Suppose you want to invest in a particular mutual fund scheme through a lump sum route with an investment amount of Rs 1,00,000 for ten years. The expected rate of return here is 10% on the investment. Now, the calculation for identifying the future value will be as follows,

Future Value = 1,00,000 (1+.1)^10

Future Value = 2,59,374

As per the above calculation, with an investment of 1 lakh rupee, you will receive Rs 2,59,374 as a return. The actual gain will be Rs 1,59,374 approx.

For calculating just the returns, manual calculations are quite simple. But if you want to compare various fund schemes, these calculations don’t come in handy. Besides, there are chances of errors in manual calculations, which can ruin your financial planning.

A lumpsum calculator simplifies such complexities and possibilities of errors with its single input procedure. All you have to do is to enter the required input values and get your results within that moment. A typical lumpsum calculator asks for three variable inputs from users, such as

The investment amount; lump sum amount you want to invest

The investment period; the time frame for which you want to stay invested

The expected rate of return; is the interest rate you will get from a fund scheme.

And as per these inputs given by the user, the calculator will provide results accordingly. You can change the input value as many times as you want until you get satisfactory digits in terms of returns.

## Here’s how you can use a lumpsum calculator online

Following are the steps performed utilizing Glide Invest’s lumpsum calculator that you can use for reference purposes.

• Now go to the menu bar, click on tools, and then financial calculators.
• Once the page opens, select the lumpsum calculator
• Enter or select the input values to get the results.

The results will be made available to you as

• The estimated value: The total amount you will get at the end of the tenure
• The total investment: The amount you are required to or will make.
• Estimated returns: Actual returns, excluding your investment amount

Based on these results, you can forecast your returns from your investments before actually investing in mutual funds. Doing so removes the scope of any error in planning and strategy forming, pushing the ROI ratio higher than you actually anticipated.

## The benefits investors get to enjoy with a lumpsum calculator

• Since returns from lump sum investments are subject to market fluctuations, it’s impossible to get an exact value in terms of returns. Lumpsum calculators remove such barriers and offer the best possible estimate of returns.
• If you have a goal in mind, a lumpsum calculator will help you know whether or not you will meet your goals within the specified time frame.
• Lumpsum calculators help investors plan and manage their finances based on calculations as they have an estimate of their investment.
• Lumpsum calculators are easy-to-use tools that you can access anytime, anywhere.

Lumpsum calculators are one of the most practical assistance tools for financial planning out there. By leveraging the power of lumpsum calculators, you not only remove the complexities related to calculations but get estimated results, too, which are integral to your investment. Try and find yourself.

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