How can I convert my current SIP plan into a lump sum?

Mutual fund investment offers flexibility to the investor. Both systematic investment plan (SIP) and lumpsum investment helps investor achieve diverse investment goals of the investor. However, each mode of mutual fund investment comes with its own benefits. SIP investment allows you to invest a certain amount at regular intervals for a specific period in a disciplined way. On the other hand, a lump-sum investment is a one-time investment into a mutual fund scheme.

As a mutual fund investor, you may want to convert your SIP plan into a lump-sum investment option, but there is no such thing called conversion from SIP to lump-sum. If you want to convert your SIP investment into a lumpsum investment, you first need to stop the systematic investment plan and then can invest the lump sum corpus into a mutual fund. Both SIP and lump sum are different modes of investing in mutual funds. You can do the sifting from SIP investment strategy to lumpsum strategy in two ways:

  1. Stop the existing SIP investment, redeem or switch the SIP value into another mutual fund scheme in lumpsum.
  2. Stop the existing SIP investment and leave it there to grow for the long term. Make upcoming investments in lumpsum.

Before starting your lump sum investments in a mutual fund, you can easily calculate the estimated return and fund value using a lumpsum calculator.

What is a lumpsum calculator?

A lumpsum calculator is a valuable tool available online that helps you calculate the estimated future value of your lump sum mutual fund investment. It is the simple and easiest way to estimate the future value of your lumpsum investment. The calculator is designed based on the below mathematical formula:

A = P (1+r/n) nt

In this formula,

A – Estimated future value of a lumpsum investment

P – Principal or Initial investment amount

r – estimated rate of return

t – total investment duration

n – compounding frequency in a year

Let’s take an example to understand this. Let’s say you have invested INR 5,000 in SIP for 3 years and the value of the same today is INR 2,20,000. Let’s say you plan to invest this corpus into a lump sum for the next five years and you expect the estimated rate of return to be 12% p.a. Let’s calculate the estimated future value of your lumpsum investment into mutual funds:

A = P (1+r/n) nt

    = 2,20,000 (1 + 0.12/1) 5

      = INR 3,88,000

You can calculate this estimated future value in no time using the lumpsum calculator online. Using the lumpsum calculator online is extremely simple and easy. You can get the results in seconds within a click. Here is a simple step to follow to calculate the estimated future value of your lump sum mutual fund investment using a lumpsum calculator.

  • Log on to lumpsum calculator online
  • Click on ‘I know my investment amount’ and mention the lump sum amount that you are investing in a mutual fund
  • Select the period in years
  • Choose the investment strategy. The estimated rate of return is taken based on the investment strategy chosen. The estimated rate of return for an aggressive strategy would be 12%, 8% for a balanced strategy, and 6% for a conservative strategy. You can also customize your investment strategy.
  • Click on ‘calculate’ to know the estimated future value of your lumpsum investment.

In case you know your goal amount, you can select the ‘I know my target amount’ option to know how much lump sum amount you need to invest in a fund to reach your goals. In that case, you need to provide your target amount, period of investment, and investment strategy to calculate the lump sum amount to be invested in a mutual fund

You can make use of these valuable tools available online to plan your investments.

Published by Nidhi Mehra

I am blogger with 5 years of experience in writing articles and topics related to finance and funds

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