An investment calculator is a powerful tool designed to help individuals plan and assess their financial growth over time. By inputting key variables such as the initial investment amount, interest rate, and investment duration, the calculator projects potential returns, allowing users to visualize how their money can grow. Whether you’re saving for retirement, a major purchase, or simply looking to build wealth, understanding how an investment calculator works can empower you to make informed financial decisions, tailor your strategy, and optimize your investment outcomes.
What is an Investment Calculator?
If one is investing money without knowing anything about the plan or without the sense that where it will take you? Then in this situation, all you need to look for the Investment Calculator which enables you to look forward with the investment business and to see the result using Investment Calculator, you can use it regularly, in few investments scenarios of the long term investment benefits that will surely help you to grow more.
What is a Lump-sum Calculator?
A Lump-sum Calculator is used as a utility tool that enables you to show the wealth you gain over the long-term investment. In Mutual Funds Investment, the Lump-sum Calculator works as a smart tool to calculate the returns in a lump sum. A Lump-sum Calculator contains a formula box in which you can enter the amount you invest, the total period of investment (in years), and the annual growth rate of returns on the investment. Hence, you will find the result within seconds that will show you the amount expected with returns and the wealth you can gain.
The format of the Lump-sum Calculator is shown below:
Lump-sum Investment (INR )
| INR 5,00000 |
Investment Period (years)
| 20 |
Returns
| 0.07% |
(Average rate of returns is based on your investment risk portfolio)
How Does the Lump-sum Calculator Works?
The Lump-sum Calculator works on the principle of future value. It will show you the investment with the future value at a certain rate of interest. For calculating the investment with the expected returns, one must use the mathematical formula, that is:
FV = PV (1+r)^n
Here, FV stands for the future value.
PV stands for the present value.
R shows the rate of interest, and
N shows the number of years.
Let’s take an example, to understand the concept in a better way. If X has invested a lump sum amount of INR 1,00,000 in a scheme for 20 years in mutual funds and X has the expected rate of return as 10%. Then X may calculate the future value of the investment as:
*FV = 1,00,000 (1+0.1)^20
*FV = 6,72,750, As a result, in which X has gain wealth of INR 5,72,750 as X has invested INR 1,00,000 which has grown to INR 6,72,750.
Therefore, by deducting the wealth gain from the invested money X funds the result of its grown money is: INR 6,72,750 – INR 1,00,000 = INR 5,72,750
How to use Lump-sum Calculator in Investment?
The following ways will help you out to use the Lump-sum Calculator in your investment process.
- First, you have to enter the amount of your investment.
- Secondly, you have to fill up the investment period in terms of years.
- Then you have to enter the annual growth rate of returns in percentage.
- Then click on enter.
- The result will appear within seconds that will show you the total returns you will earn on your investment.
Benefits of Lump-sum Calculator
These are some points to explain to you the benefits of using the Lump-sum Calculator.
- The Lump sum Calculator shows the result of the returns within seconds on your screen.
- It provides you the idea to evaluate that you will reach the financial goals or not at the end of the investment.
- It works as a smart tool that let you find the returns based on your Lump sum investment in mutual funds.
- It also helps you to provide an idea of the maturity value of your investment so that you can manage your finance in a better way.
- For new investors or beginners, the Lump-sum Calculator is easy and convenient to calculate the returns of their investment plans.
Frequently Asked Questions
Q1. How do you calculate investment?
Ans. Return on Investment (ROI) is calculated by subtracting the initial value of the investment from the ultimate value of the investment (which equals the net return), then dividing this new range by the value of the investment, and, finally, multiplying it by 100.
Q2. How much money do I need to invest to make $2000 a month?
Ans. By this calculation, to get $2,000 a month, you’d need to invest around $48,000 in a revenue-generating online business. Here’s however the maths works: A business generating $2,000 a month is generating $24,000 a year ($2,000 x 12 months).
Read Also: Top 10 Safe Investment Plan with High Return in India
