Mutual funds can be categorised into SIP plans and lumpsum investments. While SIPs are quite popular nowadays, lumpsum investments are not far behind. However, they are riskier and require a high investment amount. That is why it is best to calculate your benefits carefully before you start investing.
A SIP lumpsum calculator can calculate the estimated maturity amount of your investment, whether you are investing in lump sum or SIP. This way, you can see how much return you will receive after investing it for a specific period with the help of this tool.
How Does a SIP Lump sum Calculator Work?
A lump-sum calculator follows a simple formula to calculate your returns.
M = P (1 + r/n) ^ nt
Here, "M" refers to the maturity amount, "P" is the amount invested, "r" is the rate of return, "n" is the compounded interests in a year, and "t" is the investment duration.
Let's understand this with an example:
Suppose you are making a lump-sum investment of Rs.10 lahks in a fund with a 10% interest rate for 5 years, compounding every 6 months. So the estimated maturity amount would be Rs.16.1 lakhs. This means you will get a return of Rs. 6.1 lakhs by investing Rs.10 lakhs.
Similarly, if you invest Rs. 15,000 every month for five years with an interest rate of 12% in a SIP, your maturity amount would be Rs. 12,37,295.
How to Use a SIP Lump-sum Calculator?
It is important to remember that a SIP lumpsum calculator can only give you an estimate of maturity value. The actual return depends on several factors, including interest rates, the performance of the fund, etc. Therefore, there's a possibility that your actual return may be higher or lower than the estimate.
Follow the steps mentioned below to use a SIP lump-sum calculator properly:
- Before using the calculator, ensure you have the necessary details, including your investment amount, expected rate of return, and investment duration.
- Next, access a reputed and reliable online SIP lumpsum calculator.
- Enter the three values and select your investment type (lumpsum or SIP).
- At last, the calculator will show you the estimated returns instantly.
Many calculators provide the option of adding the name of a specific scheme to get more accurate returns. If you have a preferred scheme, you can easily add its name to the calculator for the most accurate response.
Benefits of a SIP Lump-sum Calculator
Here are some of the benefits of using a SIP lumpsum calculator:
Better Financial Decisions
A SIP lumpsum calculator provides accurate estimates of returns based on your preferred investment amount, duration, and rate of return. This gives you the information needed to make informed financial decisions.
Comparison Between SIP and Lump sum
You can use the calculator to calculate returns on SIP plans and lumpsum investments. This allows you to see the estimated returns side by side. You can use this to compare the two investments and choose the one that better aligns with your financial goals.
Easy to Use
Using a SIP lump-sum calculator is easy. You only need to input the investment amount, type of investment, investment tenure, and the rate of return. The calculator will give you the results instantly.
Scheme Specific Projections
One of the best things about a SIP lump sum calculator is that it can also give scheme-specific projections. If you already have a few preferred schemes and want to determine the best one, you can use the calculator to compare them. With estimated returns in front of you, you can easily decide the best scheme.
Final Words
The SIP lump-sum calculator can be a powerful ally in your investment journey. With advantages like easy-to-use, scheme-specific projections, and easy comparison between SIP and lumpsum investments, it can help you make informed choices that align with your goals and objectives.
Disclaimer - Information provided in this blog is for general informational purposes only, not financial advice. Investing carries risks, and past performance doesn't guarantee future results. Read more blogs on our website.
