A lump sum calculator determines the maturity amount of present value as a lump sum investment or a one-time investment after a specified time. You need to key in the amount to be invested, the investment horizon over the number of years and the maturity amount and the expected rate of return to find the earnings on the investment.
Investments in mutual funds can be divided into two categories: lump sum and SIP. A lump sum investment is when the depositor makes a significant investment of money in a particular mutual fund scheme. On the other hand, SIPs or Systematic Investment Plans5 require small amounts of savings every month.
Both of these types of investment strategies have a good share of profit. Most investors prefer lump sum investment, as it involves fewer variables and the returns are usually higher. You can use the online mutual fund lump sum calculator to find the expected return on your mutual fund investment.
How can you get help with a lump sum calculator?
Mutual fund lump sum calculator can be used by mutual fund investors to calculate the expected return on their investment. Before you get into the benefits of using this calculator, one must know the type of returns for a lump investment.
- Full refund
- Total return
- Annual return
- Point to point return
- Trailing return
- Rolling return
It is essential that an investor genuinely knows all these types of returns to take advantage of their mutual fund investment to optimize profit.
Now that you are familiar with the return form, it is time to explore the benefits of using a Mutual fund lump sum return calculator:
- This calculator will provide an estimated return for the entire investment period. Using this calculator, you can calculate the returns of 1 year, three years and five years of your investment.
- It is incredibly convenient and user-friendly. Even a layperson can use this calculator relatively easily.
- That gives a reasonably accurate estimate. Remember that investing in mutual funds is subject to market risks and cannot be accurately forecasted.
- A Mutual fund lump sum return calculator helps an investor better plan their investment based on their expected return at the end of their investment period.
The formula to calculate mutual fund returns
All lump sum calculator mutual funds use a specific method to calculate estimated investment returns. It is essentially a compound interest formula of which one variable is equal to the number of compounding interest in a year.
Following is the formula:
The variables are mentioned in below.
A = P (1 + r/n) ^ nt
A – Estimated return
P – Present value
r – Rate of return
t – Investment period
n – Number of compounding interests in a year
Note: You can use this formula to calculate your mutual fund returns correctly