As the new financial year kicks off, many salaried individuals are receiving their annual bonus. This time of the year brings a sense of a fresh start, new budgets, some goal setting, and often, the temptation to either spend a chunk or let that extra money sit idle in a savings account. But if you’re thinking a bit longer term, this bonus can play a useful role in your investment plan.
One option that’s worth considering is making a lumpsum investment into a mutual fund. Whether you’re relatively new to investing or someone who’s already building a portfolio, putting your bonus to work can potentially make a difference over time—if you plan it right. This is where a lumpsum mutual fund calculator comes in handy.
It’s a simple tool, but when used properly, it can give you a sense of what that one-time investment may potentially earn over time.
What does it mean to invest a bonus as a lumpsum?
A lumpsum is a one-time investment in a mutual fund, typically involving a substantial sum.
Unlike SIPs, where you invest a fixed amount every month, lumpsum investing means deploying the entire amount upfront. And while this might feel a little intimidating at first, especially if you’re used to smaller monthly investments, it doesn’t have to be all-or-nothing. You can always choose how much to set aside and how much to invest.
Starting at the beginning of the financial year gives you the advantage of planning ahead—especially if you’re thinking in terms of a 3, 5, or 10-year horizon.
Why use a lumpsum mutual fund calculator before investing?
It’s natural to wonder—if I invest this amount now, what could it grow to after a few years? A lumpsum mutual fund calculator helps answer that by projecting the potential value of your investment based on a few basic inputs:
- Your investment amount (say Rs. 1.5 lakh)
- The time for which you plan to stay invested (for example, 5 years)
- An assumed annual rate of return (eg: 12% for an equity mutual fund in long term)
The calculator then shows you a rough estimate of what that amount could potentially grow into, assuming returns stay consistent over that time. It’s important to note, however, that the calculator’s estimates are for illustrative purposes only. Mutual fund returns are not guaranteed and depend on market conditions.
However, running a few scenarios on the calculator, with different return rates and durations, can give you a sense of how your bonus might grow over time. It also helps you compare the potential growth in different avenues – such as fixed deposit vs mutual fund.
How to select a fund?
The suitable fund for you depends on several factors, including your risk tolerance levels and investment horizon. For example, if you’re seeking better long-term growth potential, are planning to stay invested for five years or longer and can stomach market volatility, equity funds may be an option. For shorter durations or if you want relative stability of capital, debt funds may be considered.
But the key thing is not to chase returns blindly. Use the calculator to set realistic expectations.
Planning regular investments
While the lumpsum calculator helps you decide what to do with your bonus today, there’s another tool that can support your monthly investing habits—especially if your salary typically increases annually.
If you’re already doing SIPs and your income has gone up, this might be a good time to think about increasing your SIP amount too. That’s where a SIP top up calculator comes in handy.
It shows how increasing your SIPs gradually over time—say, by 10% every year—can potentially grow your investments faster than sticking to the same amount every month. It’s a useful way to match your investments with your income growth.
For instance, if you were investing Rs. 5,000 a month and you now have more room in your monthly budget, you could consider stepping it up. The calculator will show you the difference that increase might make over a 10 or 15-year period. Just like with the lumpsum calculator, the goal isn’t to chase high numbers—it’s to get a practical sense of how disciplined investing adds up over time.
Remember, discipline and strategic planning can go a long way when it comes to investing.
