How to Use a Lumpsum Calculator for Mutual Funds

12th December 2022 - 11:26 pm

Financial calculators are an important tool of financial planning. One of the most popular calculators in personal finance planning is the lumpsum calculator. You can understand the lumpsum calculator in terms of two applications.

• Lumpsum calculator can be used to determine, how much a fixed corpus invested today would be worth after a certain number of years and assuming a certain CAGR returns over this period.

• The other application of the lumpsum calculator is actually to look at the above situation in reverse. In practice, we need to know how much corpus we need today to meet our future goals. Lumpsum calculator can be use for goal planning also.

Lumpsum calculator and how much your money will grow

The table captures how much a fixed corpus of Rs.500,000 today will grow at the end of different time periods. The MF portfolio is expected to appreciate at 14% CAGR.

At the end of X Years	Corpus of	Will grow to
5 years	Rs.500,000	Rs.962,707
10 years	Rs.500,000	Rs.18,53,651
15 years	Rs.500,000	Rs.35,68,969
20 years	Rs.500,000	Rs.68,71,745
25 years	Rs.500,000	Rs.1,32,30,958

The lumpsum calculator clearly shows how a fixed corpus grows on its own over different periods of time. Clearly, the longer you hold, the better it is.

Lumpsum calculator for goal planning

A more practical way is to use a lumpsum calculator for goal planning. For example, if you target to reach a corpus of Rs.1 crore after 20 years in mutual funds at a CAGR of 14%, what would be the initial investment requirement. Here again, the lumpsum calculator can show you how much you need to start off with today.

Also Read: SIP Calculation: How to Make Rs. 1 Crore for Retirement

For example, if you want to reach a target of Rs.1 crore, as in the above case, you must start off with a corpus of Rs.727,617 and invest it in mutual funds with CAGR potential of 14% annualized and hold on for 20 years. The lumpsum calculator provides financial planning analytics both ways.