How mutual fund calculators are helpful for your investments

Mutual fund investments becomes easier to navigate and understand due to various mutual fund calculator available at our disposal such as the SIP or lumpsum calculator. These are available online, user friendly and easy to use for all kinds of investors. It helps investors in estimating the corpus that can be expected from their mutual funds so that they can plan finances accordingly. Let us get to know more about them but first, let us understand the two primary ways of making an investment in mutual fund schemes –

Lumpsum – It is a one-time investment wherein you invest a substantial amount in a chosen mutual fund and let the money generate compounding returns over a period of time. This method is suitable for those investors who have a good corpus lying around or have inherited it recently.

SIP – Systematic investment plan or SIP is a style of investing where one can invest a chosen amount at given intervals, over a tenure. This is ideal for investors who are salaried people or someone looking to make a start in mutual fund investing.

Now, in relation to these methods, there are financial calculators to assist you.

What is a lumpsum calculator?

Lumpsum calculator is a tool that can help you get an estimate of your future corpus – based on the inputs such as amount to be invested, time period and assumed rate of return. Once you have clarity on these and enter the variables, the calculator displays in seconds, the amount that can be expected from your lumpsum investment in mutual funds. Suppose, you invest an amount of Rs. 2,00,000 for a period of 30 years assuming 12% annual returns. The lumpsum calculator will display the amount as Rs. 59,91,985.

Sometime while searching for lumpsum calculator, you come across lumpsum SIP calculator. Before using the same, check the functionality it offers. Ideally the mutual fund calculator will be either lumpsum calculator or SIP calculator.

What is a SWP Calculator?

SWP or systematic withdrawal plan is an arrangement where an investor, after investing in lumpsum, can start withdrawing pre-determined amounts from it. In this way, they can get a regular income during retirement days or otherwise. The SWP calculator is a simulation that displays the monthly withdrawals from your mutual fund investments. It also helps to know the total value of the investment after the withdrawal. It consists of a formula box, where you enter the one-time investment amount, monthly withdrawal amount, the expected rate of return, and the investment tenure. Then, it shows you the future value of your mutual fund investments, post the regular withdrawals.

We did an analysis of various mutual fund calculators such as the lumpsum calculator and SWP calculator, in this read. Based on how you are investing and what is the investment purpose, an appropriate calculator can be used. Lumpsum calculator helps know the future value of your one-time investment in mutual funds while SWP calculator lets you know what would be the remaining balance post your regular withdrawals through SWP. Ideally if the SWP withdrawal rate is lower than the mutual fund investment returns, you can get some capital appreciation too.