JustPaste.it

How do I get to know Which mutual fund is good for lump sum investment?

User avatar
user66222 @user66222 · Mar 30, 2022

If you are wondering which mutual fund to choose for lump sum investment, then you can take the help of the lumpsum return calculator available online. Investing in mutual funds in one go is a huge decision that needs to be taken wisely. Thus, you need to choose the fund after a thorough analysis and here a lumpsum calculator can help. 

What is a lump sum investment?

A lump sum investment in a mutual fund means the investor invests a significant amount in a particular mutual fund scheme at one go. Suppose, on the 1st of July, 2022, you invest Rs. 100000 in a particular mutual fund. This is different from SIP investment as in SIP, you invest every month a certain amount for a certain period say 5 years or 10 years as per your investment goals. The amount in SIP is also small compared to the amount invested as a lump sum. 

Usually, lump-sum investment offers higher returns as the money invested is at one go and the returns start generating from the date of investment on the whole amount. However, there is a flip side as well and that is the risk is higher as the investment is large. 

What is a lumpsum return calculator?

A lumpsum return calculator is an online application where you can calculate the return you can generate by investing a lump sum amount in a particular scheme. in simple terms, it will help you estimate the amount at the time of maturity of the fund. Suppose, you invest Rs. 1 lakh today, for five years and the average rate of return is around 12% then the amount you can accumulate by the end of 5 years, is what a mutual fund lumpsum calculator will help you estimate. 

How does it work and how to use it?

You can use the lumpsum calculator to calculate the amount you can accumulate after the investment tenure you choose. This calculator uses a formula that is 

A = P (1+r/n)^nt

Here, 

A =  Anticipated Return 

P = Amount you invest

R = rate of return

T = Tenure of investment

N = number of compounded interests in a year

So, taking the example given above, 

P = Rs. 100000

N = 12

T = 5 years

R = 12%

So, if you invest Rs. 100000 today for five years compounding monthly, then at the end of 5 years, your returns can be around Rs. 76234 and the accumulated amount will be Rs. 176234. 

Using the mutual fund lumpsum calculator is a cakewalk. You can just open any of the calculators available online, and there are ample of them. Enter the amount you want to invest, select the estimated return rate, and the tenure, the lump sum return calculator will give you the amount you can generate at maturity. 

With the help of a lumpsum calculator, you can find out which mutual fund is good for lump sum investment. All you need to do is shortlist some of the top funds, then check their returns for 3-years, 5-years, or more. Then open the calculator enter the amount you want to invest and the tenure of the investment. Then check with the return rate for all the schemes you have chosen and compare which scheme would give you a higher return. Accordingly, you can pick the mutual fund scheme for lump sum investment. 

Conclusion

Investing lump sum amount can help you earn higher returns from the mutual fund scheme provided you can pick the right scheme. With a mutual fund lumpsum calculator, you can easily check and compare different mutual fund schemes available for lump sum investment and compare their returns.