What is Lumpsum Investment?

A lump sum investment is depositing the entire amount at one go. Lump-sum investment is a popular way of investing in mutual funds. If you invest the entire amount available with you in a mutual fund scheme, it is called the lump-sum mutual fund investment. Lump-sum investing is a common mode of investment for HNIs and big-ticket investors. It is an excellent way of investing in the long-term. An investor who has a high-risk tolerance may consider investing a lump sum amount in a mutual fund scheme. You may consider lump-sum investment for a windfall such as an inheritance, bonus, or a gift. If you get the market timing right, you may profit from the lump-sum investment. It is an ideal investment for the long-run. 

You must still invest based on your investment goals, risk appetite, and time horizon. Lump-sum investing is not suitable for short-term investment. If you are not confident with handling large amounts of money, you may opt for a systematic investment plan or SIP that staggers investments over some time. It helps you avoid timing the market. Investing a lump sum amount of money depends on the need for funds. Failure to plan for liquidity could mean liquidating assets at a loss.

What is a Lump sum Calculator?

A lump sum calculator is a utility tool that shows you the wealth gained over the long-term. It is a smart tool to calculate the return on a lump-sum mutual fund investment. A lump sum calculator consists of a formula box, where you enter the investment amount, investment period in years, and the annual rate of return expected on the investment. The lump-sum calculator will show you the expected amount and the wealth gain in seconds.

How does Lump sum Calculators work?

Lump-sum Calculators work on the principle of future value. The lump-sum calculator tells you the future value of your investment at a certain rate of interest. 

You must use the mathematical formula: FV = PV(1+r)^n 

FV = Future Value PV = Present Value r = 

Rate of interest n = Number of years 

For example, you have invested a lump sum amount of Rs 1,00,000 in a mutual fund scheme for 20 years. You have the expected rate of return of 10% on the investment. You may calculate the future value of the investment as: FV = 1,00,000(1+0.1)^20 FV = Rs 6,72,750. You have invested Rs 1,00,000 which has grown to Rs 6,72,750. The wealth gain is Rs 6,72,750 – Rs 1,00,000 = Rs 5,72,750.

How to use the ClearTax Lump sum Calculators?

The ClearTax Lumpsum Calculator shows you the future value of your mutual fund investment in seconds. To use the ClearTax Lumpsum Calculator.

• You must enter the investment amount.
• Fill up the investment duration in years.
• You then enter the annual expected rate of return.
• The ClearTax Lumpsum Calculator will show you the return on your investment. It also displays the wealth gain.

Benefits of ClearTax Lumpsum Calculator

• The ClearTax Lumpsum Calculator shows you the return on a lump-sum investment in seconds.
• It helps you evaluate if you can reach the financial goal at the end of the investment term.
• It is an excellent tool to find the return on a lump-sum investment in mutual funds.
• It helps you manage finances better as you have an idea of the maturity value of your investments.
• It is easy and convenient for novice investors to calculate the return on their investments.
• You can select investments that may offer return above inflation to achieve investment goals over the long-term.