About Lumpsum Calculator & FAQs
What is a Lumpsum Investment?
A lumpsum investment is a one-time investment of a significant amount of money into an investment scheme, as opposed to regular smaller investments like a Systematic Investment Plan (SIP).
When is a lumpsum investment suitable?
Lumpsum investments are suitable when you have a substantial amount available at once (e.g., from a bonus, sale of property, or inheritance) and are comfortable investing it all together. Market conditions and your risk appetite should also be considered.
How does this Lumpsum Calculator work?
This calculator estimates the future value of your one-time principal investment. You need to input the principal amount, the expected annual rate of return, and the total investment period in years. It then shows the projected future value and a year-on-year growth breakdown.
What are the risks associated with lumpsum investing?
The primary risk is market timing. If you invest a large sum just before a market downturn, your investment might lose value initially and take time to recover. SIPs help mitigate this timing risk by spreading investments over time (rupee cost averaging).
How does the power of compounding apply to lumpsum investments?
Compounding is particularly powerful with lumpsum investments. Your initial investment earns returns, and then those returns themselves start earning returns. Over a long investment horizon, this "interest on interest" effect can lead to substantial wealth accumulation.