Mutual Fund Lumpsum Calculator
Mutual Funds are investment vehicles created by collecting money from several investors, and then using these funds to invest in securities such as stocks, debts, bonds, and other monetary instruments and assets. They are managed by the professional asset managers who have deep skills and perspectives on the functioning of the investment markets.
Once you invest in a Mutual Fund, you don’t have to bother with monitoring the market constantly, or deciding where to invest into. Each Mutual Fund has its prospectus, which states the investment target of the fund — and that’s what the fund managers aim at achieving.
The value of a Mutual Fund is denoted by its Net Asset Value, i.e. the average of the total value of all the securities held by the fund. But NAV of a fund is calculated on a daily basis so may not be the best measure for gauging the performance of a fund, instead one should study the returns on the investment given over a year or a longer period in which the fund has been active.
Lumpsum investment is one of the ways of investing in a Mutual Fund.
Mutual fund lumpsum calculator
The return on your investment is calculated by using the Compound interest formula.
The formula to calculate compound interest for a lump sum is A = P (1+r/n)^nt where A is future value, P is present value or principal amount, r is the interest rate, t is the number of years the money is deposited for and n is the number of periods the interest is compounded each year.
n many cases, the amount is compounded once hence the formula can be simplified to A= P(1+r)^t
Conversely, if you know the value of A, which means you want to set a target for your investment and assume r for a investment you can calculate the Principal Amount.