Unplanned and unaided, investing in long-term equity funds proves detrimental, prompting investors to adopt relevant financial planning tools, which include the lump sum calculator in the form of educated guesses. This lump sum calculator generates an estimate of returns that investors expect from a single investment taken for a time horizon specified against equity mutual funds. It furthers the case of young people and first-time investors, who would like to weigh their options well before committing, without having to guess.
A lump sum calculator online tool, which estimates an approximate return out of a lump sum investment in mutual funds, sets itself apart from SIP—"Systematic Investment Plan"—where investors invest a constant amount at a fixed time. Generally, investing a lump sum involves a huge amount of money at one time; on the contrary, SIP means investing a small amount regularly. Lump sum calculators work on the parameters defining the investment amount, expected annual return, and investment horizon, and indicate the growth that might happen with time.
Using a lump sum calculator is simple and does not require any financial background. The steps are outlined below:
1. Specify the Amount to be Invested Using a lump sum: Enter the total amount that one can afford for a lump sum investment.
2. Entry of Expected Annual Yield: Long-term equity funds provide varied returns according to market performances. Investors can enter an estimated annual return based on past occurrences or suggestions from an advisor into the calculator.
3. Time of Investment: Enter how long you will keep the investment up. Equity mutual funds mostly grapple with an investment of more than five years.
4. Check the Expected Returns: Once entered, you find an estimate of how valuable your investment will be at the end of that period, helping set realistic expectations in terms of finances. Many investors tend to compare SIP vs Mutual Funds, but what they often forget is that SIP merely serves as a method for investing in mutual funds and not as an independent product in itself. Investors can choose to either invest through a lump sum or systematic investments (SIP) in mutual funds.
Lump-sum Investment
This method suits those with surplus funds who are willing to take higher risks. But the only point where they can take advantage of market movements is the one single-time investment window.
SIP Investment
It is a method whereby investors can save smaller amounts on a regular basis. The payment mode encourages financial discipline and reduces the risk of market volatility through rupee-cost averaging.
Both approaches link to mutual funds; deciding on either depends on an investor's financial goal, forecast of the market, and risk-bearing capacity. So, a lump sum calculator provides that last clarity, especially when one considers a single investment in equity mutual funds.
Unless a mutual fund investor plans to go up and down the lump sum route, he does need market knowledge. Trade hours in India define when this investor knows when his investment will take place or not. The equity market remains predominantly open every weekday from 9:15 AM to 3:30 PM only. It never operates on holidays.
How MCX Holidays Affect Your Trading Strategy: Insights for Young Professionals
The MCX is an exchange that remains closed on several national and regional holidays. Hence, transactions of funds linked to the commodity markets stand closed during that time.
Although MCX holidays may not affect long-term mutual fund investments in themselves, they affect the overall market medium sentiment. If your equity fund investment includes equities related to the commodities sector or companies dependent on them, you will feel the impact of these holidays through short-term price movements.
For young professionals, this forms part of the overall investor education process that will help to build a sound investment approach through awareness of trading schedules and market holidays. Even though such long-run investments are not immediately under influence, every trader knows when the fund transaction takes place, and market news flowing in will not be a surprise.
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