Whether it’s about investing in mutual funds or other lucrative ventures, one of the best ways to determine the potential returns on your investment is using a lumpsum calculator. It presents a snapshot of future wealth one could create with their financial input today. In India, financial advisers often recommend the use of lumpsum calculators to plan and estimate potential financial gains. If you are unsure about how to use it, this article will guide you step by step on using a lumpsum calculator for your investment.
A lumpsum calculator is an online tool designed to calculate the maturity amount of one’s lump sum investment in mutual funds or other financial assets. This online instrument considers the principal amount, the expected rate of return, and the tenure of the investment to compute the approximate amount at maturity.
Here’s how you can use a lumpsum calculator:
1. Choose a Lumpsum Calculator: The first step is to choose a lumpsum calculator that suits your needs. There are multiple online platforms, including financial service providers and mutual fund websites, offering this tool. It’s extremely user-friendly, and even those with limited financial knowledge can use it.
2. Enter the Investment Amount: The next step is to input your lump sum investment amount. For example, say you wish to invest INR 5,00,000. This is the principal amount that you input into the calculator.
3. Enter the Tenure: The next step is to enter the investment duration in the calculator, which can be monthly, quarterly, or annually. If you’re planning to invest for five years, input ‘5’ into the tenure section.
4. Enter Expected Rate of Return: Here, one needs to input the expected annual rate of returns. For example, if the anticipated annual rate of return is 12%, input ’12’ into the rate of return box.
5. Calculate: After filling in all the details, click on ‘calculate’. The lumpsum calculator will instantly provide you with the estimated maturity amount.
Using a lumpsum calculator can help investors make well-informed decisions about their investments. You can use an online SIP calculator for SIP investment. They provide an estimated return on investment considering different factors like duration and rate of return. It can help you assess whether the investment aligns with your financial goals or not.
However, it’s crucial to understand that the lumpsum calculator provides an estimated amount, not a guaranteed return. The actual return might vary depending on market conditions. As an investor, you should do comprehensive research and analysis before investing your money. Consulting a professional financial adviser is also advisable for tailor-made investment plans.
Disclaimer: The investor must gauge all the pros and cons of trading in the Indian financial market before investing. The estimates given by lumpsum calculators are based on the data provided and do not guarantee actual returns. The financial market is subject to risks, and hence, all investment decisions should be thoroughly reviewed.