Lumpsum Investment | All You Need to Know About Lumpsum Investment

A lump sum investment involves making a sizeable investment in any financial instrument of your choice.

Here are some benefits of lump sum investment:

The lumpsum investment calculator is helpful for investors to estimate the returns that they will get on their investment.

So knowing how a lump sum investment calculator works is necessary for the person who is investing to get maximum benefit from their investment.

• It enables the investor to assess the potential returns he can get from the investment.
• It is user-friendly. So anyone can easily use this calculator with minimal effort.
• Calculators provide immediate results for free which saves time and effort for the investor.
• A lump sum calculator helps an investor plan his investment based on estimated returns they will get after the conclusion of the investment duration.

A lumpsum investment calculator is conducive to use, and it has many advantages.

• An investment calculator helps you get an idea about an investment plan with the assessment. However, it will not provide exact results in case of mutual funds because the outcome depends on market conditions.
• It helps you plan for various investment goals based on your estimated returns.
• It is a time-saving tool; as you know, technology makes everything easy and saves you the time and effort of making manual calculations.
• When an individual understands the projected earnings, they should manage their ongoing finances and choose a suitable aim for their investments.

The investor must enter information such as the total original investment, estimated rate of return, and time duration into the lump sum calculator. The online calculator can instantly calculate estimated investment returns based on these data.

The calculator is based on the equation below:

X = Y(1+R/N)^NT

Here,

X = Estimated return

Y= Present Value of invested amount

R = Estimated Rate of interest (%)

T= Duration of the investment

N = Number of times interest is compounded in a year

So using this formula, if you invest Rs. 2 lakhs for 20 years and earn 12% p.a. return on your investment and the interest is assumed to be compounded annually, the future value of your investment will be approximately Rs. 19.29 lakhs.