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Disclaimer: The calculator alone is not sufficient and shouldn't be used for the development or implementation of an investment strategy. This tool is created to explain basic financial / investment related concepts to investors. The tool is created for helping the investor take an informed investment decision and is not an investment process in itself. Mutual Fund does not provide guaranteed returns. Past performance may or may not be sustained in future and the same may not provide a basis for comparison with other investments. Investors are advised to seek professional advice from financial, tax and legal advisor before investing in mutual funds.
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What Is a Lumpsum Investment?
There are two main ways to invest in a mutual fund. One is through a Systematic Investment Plan (SIP) and the other is in a lumpsum. A lumpsum investment is a one-time payment into a mutual fund scheme. A sizeable sum of money is typically invested in one go and payments don’t have to be made at regular frequencies as in the case of SIPs.
Lumpsum investments can help investors potentially get the full benefits of the power of compounding when market conditions are favourable. Compounding happens if the returns on an investment, when reinvested, earn further returns. In a lumpsum investment, the entire invested capital gets the opportunity for potential compounded growth from the beginning of the tenure. In the right conditions, this can optimise return potential.
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What is a lumpsum calculator?
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When making a lumpsum investment, wouldn't it be wonderful to know the estimated future value of your investment? This is where a lumpsum calculator can prove to be helpful.
A lumpsum mutual fund calculator is a tool that shows you the potential future value of your investment, assuming a certain tenure and rate of return.
All you need to do is enter the lumpsum investment amount, the estimated rate of return, and the time (in years) that you plan to stay invested. The calculator will instantly give you the projected future value of your investment.
Do note that estimate by the lumpsum mutual fund return calculator is based on a fixed rate of return. In reality, returns are not guaranteed, may fluctuate, and will depend on market conditions.
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How does a lumpsum calculator work?
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A lumpsum calculator typically uses the compound interest formula, which is as follows:
A = P(1+r/n)nt
Where:
A is the future value of the investment/loan, including interest.
P is the principal investment amount (the initial amount of money).
r is the annual interest rate
n is the number of times that interest is compounded in a period
t is the time the money is invested or borrowed for, in years.
Doing this manually can be challenging. The calculator does complex compound interest calculations in a matter of seconds to compute the expected returns.
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How to use Bajaj Finserv AMC lumpsum calculator?
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The Bajaj Finserv AMC is easy to use that gives instant estimates and requires just three inputs. All you need to do is follow these steps:
Step 1: Enter the amount you have already invested or plan to invest in lumpsum in a mutual fund scheme.
Step 2: Enter the time period (in years) in which you plan to stay invested. It can range anywhere from 1 year to 30 years. A longer time period allows for more opportunities for compounding, which can potentially result in accelerated growth.
Step 3: Enter the expected rate of return. This can be based on the historical returns of the mutual fund scheme or category you are planning to invest in. Do note, however, that the expected return rate and the actual return rate may vary. Past performance may not be sustained in the future. Returns are not guaranteed and will depend on market conditions.
Once you enter these details, the lumpsum calculator will give you the estimated future value of your investment. You can enter multiple numbers to see how your returns can change with the different investment amounts, tenures, or expected return rates. You can keep modifying the input values to get results that are aligned with your goals.
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How can a lumpsum calculator help you?
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Using a lumpsum calculator can help you plan your investments better and choose a suitable investment amount and tenure. Instead of doing the calculations manually, you can let the calculator do the work for you and benefit in the following ways:
Here are the three steps to use a lumpsum calculator:
- Quick estimates: With just a few clicks, a lumpsum mutual fund calculator helps you determine in seconds what your final corpus can potentially amount to.
- Clear planning: The calculator can help you determine the investment amount and tenure that can help you potentially reach your goal amount.
- Flexibility: You can input different amounts and tenures on the tool to see the resultant final value. You can change these values as many times as you like to arrive at the amount or tenure that is aligned with your goals.
- Convenience: The mutual fund lumpsum calculator is an online tool, so you can use it whenever you need to and quickly estimate the potential future value of your mutual fund investments.
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Frequently Asked Questions (FAQs)
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In a lumpsum investment, the entire amount is put into the mutual fund at once. In comparison, in a Systematic Investment Plan (SIP), a fixed amount is invested in a scheme at regular frequencies, such as daily, weekly, monthly, quarterly, etc.
You can invest in mutual funds either online or offline through the following routes, among others:
1) Directly through the Asset Management Company or mutual fund house
2) Through a registered mutual fund distributor
3) Through an aggregator
4) Through a registrar and transfer agent (RTA) such as CAMS or KFintech
To make a lumpsum investment, you can follow these steps:
1) Identify a mutual fund scheme.
2) Decide on an investment amount. You can use an MF lumpsum calculator to help you plan a suitable amount based on the potential returns.
3) Apply either online or offline through the AMC, a distributor, an aggregator platform or an RTA.
The minimum amount that you can invest as a lumpsum can vary from one fund to another. There is no maximum limit.
The lumpsum investment calculator is accurate based on the values you provide. However, you should note that the returns shown in this calculator are estimates based on your inputs. The actual returns may vary depending on the fund's performance and prevailing market conditions.
Neither option is inherently better than the other. SIP encourages discipline, makes it possible to invest small amounts, and can mitigate the impact of volatility on the investment. It also does not require market timing as investments follow a schedule. Lumpsum investments have the potential for higher returns, but only when timed well. You may decide on the investment mode based on your market knowledge, risk appetite, goals, and budget. An SIP calculator and a lumpsum calculator can both help you plan your investments effectively and understand potential returns for each approach.
A calculator cannot help you achieve your goals, but it can help you create a well-rounded plan to work towards them. Instead of manual calculations or guesswork, you can use the calculator to get clear estimates of what the future value of your investment can potentially be. It factors in your investment amount, expected return rate and investment period to estimate the potential growth. This helps you determine how much you might need to invest to potentially achieve your goal. It also allows you to experiment with different values and adjust your investment plan if needed.
The MF lumpsum calculator does shows the projected return from mutual fund investment, based on the inputs you feed into the tool. It takes your expected rate of return and uses that for its estimates. However, the actual returns will depend on market movements and can vary from your expectations.
The amount can vary from scheme to scheme and can differ from one asset management company to another. It can start as low as Rs. 100.
Yes, all mutual fund investments are subject to market risk. The degree of risk depends on the type of scheme. For instance, equity funds are generally riskier than debt funds.
Mutual fund tools such as SIP, lumpsum calculators are very beneficial but also come with some limitations. The calculators give their estimates based on your inputs, which may or may not be achieved in reality. The calculators assume a fixed rate of return. However, it does not factor in market volatility and possible fluctuations in an investment’s value. Hence, tools like lumpsum, SIP calculators should only be used as a reference and for help in planning. The figures shown on them are indicative and there is no guarantee that returns will be achieved.
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- Bajaj Finserv Asset Management Limited has been referred to as Bajaj Finserv AMC.
Copyright: All Rights reserved at Bajaj Finserv Asset Management Limited
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