A lumpsum investment in assets can be a quick and easy way to diversify your portfolio. With a lumpsum calculator, you better assess how this large sum of money may grow over a given period, at the rate of returns you expect from the asset or scheme.
A lumpsum investment is a strategy where you invest a large sum of money upfront in the asset or scheme of your choice. Various investment options support lumpsum investments. Some common examples include fixed deposits, mutual funds, gold, direct equity and government bonds. To make a lumpsum investment in any eligible scheme or asset, you need to have a large sum available at your disposal. If you do, you can use the sum to purchase units in your preferred financial instrument.
A lumpsum calculator is an online financial tool that helps you understand how a large sum invested today may grow over a certain period, at a specific rate of returns. It is useful for investors who want to get a better idea of how their investment may pan out over the medium term or long term.
The lumpsum investment calculator is also free of use. So, you can use it several times at no extra cost to compare and assess how a change in the amount invested, the rate of returns or the investment tenure may affect the total future value of investments. Each time, the calculator displays the estimated results instantly.
A lumpsum calculator works based on the inputs that you provide it. It requires three key details — namely, the amount you plan to invest, the period of investment in years and the annual rate of returns you expect. Once you enter these details, the lumpsum investment calculator automatically computes how the lumpsum amount invested will potentially grow over the given period at the rate specified. The online tool then shows you these results, so you can better understand the returns you may earn from the amount invested.
The lumpsum calculator uses a complex formula to compute the estimated returns from a specific amount. While you need not manually compute the returns yourself, it helps to be aware of the formula involved, which is as follows:
A = P (1 + r/n)nt
Where:
A lumpsum investment calculator can be beneficial to long-term investors in many ways. The top advantages include:
To use the Bajaj Broking lumpsum calculator, all you need to do is follow the steps outlined below.
The lumpsum investment calculator will then compute and show you the total investment, estimated returns and the total value.
Both lumpsum and SIP investments have distinct advantages for investors. Let us see how the two strategies compare to further understand which is the better choice of the two.
| Aspect | Lumpsum Investment | SIP Investment |
|---|---|---|
| Investment Amount | One-time large investment amount | Regular smaller investment amounts |
| Market Timing | Higher impact of market timing; better in a bullish market | Lower impact of market timing as it averages out market volatility |
| Risk | More risk because of potential price fluctuations | Lower risk because the investments are distributed |
| Investment Discipline | Easier to make a one-time investment | Requires disciplined and regular investments |
| Capital Requirement | Large initial capital required | Possible with amounts as low as Rs. 500 per month |
| Returns | Higher potential returns in rising markets | Potentially more consistent returns over time |
| Flexibility | Less flexible once the investment is made | More flexible depending on the type of SIP chosen |
Ultimately, the choice between lumpsum and SIP investments depends on your financial situation and the market conditions. A lumpsum investment is best in a bullish market or if you have a large amount ready to be invested. While it offers higher returns in a rising market, it also comes with higher risks due to market fluctuations. A SIP, on the other hand, is more suitable if you have limited capital at your disposal or if you want to adopt a disciplined investment strategy that averages out market volatility over time.
Yes, the Bajaj Broking lumpsum calculator is extremely useful for investment planning as it gives you a clear idea of how your money could potentially grow over time.
You can use a lumpsum investment strategy if you have a large amount of liquid funds available or when the market is low, so you can minimise the initial investment cost.
Yes, a lumpsum calculator is extremely easy to use as it only requires three simple inputs. Even beginners can easily use this tool online without any guidance or hassle.
You can choose to invest a lumpsum amount in mutual funds or start a SIP, where you invest smaller fixed sums at periodic intervals.
A lumpsum investment may be more beneficial in a bullish market as it allows you to capitalise on the growth opportunity. A SIP, however, spreads your investment over time and leverages market volatility to your advantage.
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