Investments in Mutual Funds can be broadly classified into two types- lumpsum and SIP. A lumpsum investment is when the depositor invests a significant sum of money on a particular mutual fund scheme. SIP or Systematic Investment Plan, on the other hand, entails the investment of smaller amounts on a monthly basis.
Both these type of mutual fund investment strategies have their fair share of benefits. Lumpsum investments are particularly preferred by a majority of investors, as there are lesser variables involved and returns are generally on the higher side. To find out the estimated returns on your lumpsum mutual fund investment, you may use a mutual fund lumpsum calculator available online.
Mutual fund investors can use this calculator to figure out the estimated returns on their investments. Before getting into the benefits of using this calculator, one must know the types of return for a lumpsum investment.
It’s paramount that an investor understands all these types of returns in details to avail the maximum benefits from their mutual fund investments.
Now that you are familiar with the type of returns, it’s time to delve into the benefits of using a lumpsum return calculator:
All lumpsum calculator mutual fund uses a specific method to compute the estimated return on investment. It is essentially a compound interest formula with one of the variables being the number of times the interest is compounded in a year.
The formula is as follows:
A = P (1 + r/n) ^ nt
The variables are mentioned in the table below.
|r||Rate of return|
|t||Duration of investment|
|n||Number of compounded interests in a year|
You can use this formula to compute your mutual funds returns accurately. For example, imagine investing Rs. 15 Lakh in a fund with a 12% return for 5-year period compounding every 6 months.
The estimated return in this scenario will be-
A = Rs. 15, 00,000 (1 + 12%) ^ 5
As you can surmise, it’s a complex equation which may be out of grasp for a majority of investors. A lumpsum MF calculator will calculate it instantly. In this case, your estimated return at the end of a 5-year period shall be Rs. 26, 43, 513.
The lumpsum calculator available on the Groww website is easily navigable. Follow the steps mentioned below to calculate your ROI on mutual funds:
A mutual fund lumpsum calculator is an incredibly convenient financial tool which comes with a host of benefits.
Lumpsum investments are one of the most widely availed investment vehicles, most of which have a time-proven history of yielding high returns. You may begin your investment with a smaller amount and increase it as you become more comfortable with the procedure.
“Looking to invest? Open an account with Groww and start investing in direct Mutual Funds for free”
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