What is a Lump Sum Calculator?
A Lump Sum Calculator is nothing but a simple utility tool. This tool helps you to know the wealth gained by you over the long term. A Lump Sum Calculator is a smart tool that calculates the return on a lump sum investment. It consists of a formula box, where you have to enter the amount of money that you have been investing, the time period of investment in years and the annual rate of the return expected on that particular investment.
After filling in all the details as mentioned above, the Lump Sum Calculator will calculate the expected amount and the wealth that you will be gaining in seconds. With the help of a lump sum calculator, you will be able to detect these things in no time. It saves your time and gives you the calculations in seconds.
How Does A Lump Sum Calculator Work?
These calculators work on the principle of future value. A Lump Sum Calculator will help you in knowing the future value of your investment at a particular rate of interest, so that, you can have a better idea about the same. It mainly gives you an estimate as to how much wealth you will be gaining after investing.
The mathematical formula that you have used might be: –
FV = PV(1+r)^n
where,
FV= Future Value
PV= Present Value
r= Rate of Interest
n= Number of Year
What is a Lump Sum Investment?
A Lump Sum Investment is like depositing the entire amount of money in one go. It is a popular way of investing in mutual funds. If a person invests the entire amount available with him in a mutual fund scheme, it is knowns as the lump sum mutual fund investment. It is a common mode of investing for big-ticket investors and HNIs.
Lump-Sum Investing is considered an amazing way if a person wants to invest for a longer term. An investor or a person who has a high risk of tolerance might consider investing a lump sum amount of money in a mutual fund scheme. He may consider that lump sum investment for a windfall such as a bonus, inheritance or even a gift. If he will get the right marketing time, he may get a profit from that lump sum investment. It is considered an ideal investment for the long run. He must be investing on the basis of his risk appetite, investment goals and time horizon as well.
Also, a lump sum investment is not suitable for a shorter time period. If you are confident in handling a larger amount of money, you can opt for a systematic plan or a SIP. It will help you in avoiding the timing of the market. Always remember that investing an amount of money depends on the needs for the funds.
Benefits of a Lump Sum Calculator
There are a lot of benefits of a Lump Sum Calculator and some of them are mentioned below: –
- A Lump Sum Calculator tells you the return on a lump sum investment in no time.
- It also helps you to evaluate if you can reach your financial goal at the end of the investment.
- It is an excellent tool that helps you to find a return on a lump sum investment in mutual funds.
- It also helps you in managing your finances better as you will have an idea about the result of the maturity value.
- It is an easy and convenient way for novice investors to calculate the return.
- You can also select the investments that offer a return above the inflation to achieve the goals.
FAQs About A Lump Sum Calculator
✅ How does a Lump Sum Calculator show the wealth gain?
You just have to fill in the initial amount of investment, expected return and the time period of the investment. Then, you will be able to know your wealth gain.
✅ Can a Lump Sum Calculator show the return from the mutual fund investment?
Yes, it calculates the return from the mutual fund investment.
✅Is a Lump Sum Calculator easy to use?
Yes, it is very easy to use.