How a lumpsum grows
A lumpsum investment puts all your money to work on day one. Every year, returns are earned not just on what you put in, but on the returns already earned. That is compounding, and time is its most powerful input.
Invest once
You invest a single amount, for example a bonus, an inheritance or the proceeds from a property or business sale.
Compound
Returns are reinvested and earn returns of their own. The curve starts slowly and steepens with every year you stay invested.
Review
Compare what the money will be worth in nominal terms and in today’s money, after inflation, to see your real gain.
The lumpsum formula
With returns compounded monthly, the future value of a lumpsum is:
Where P is the amount invested, r the expected annual return and t the number of years.
The rule of 72
A quick way to estimate how long money takes to double: divide 72 by the annual return. At 12%, money doubles roughly every 6 years. The calculator shows the exact figure.
Lumpsum or SIP?
- Lumpsum wins over long periods in rising markets, because all the money compounds from day one.
- SIP spreads the risk of investing at a market peak, and suits money you earn every month.
- For a large amount, a middle path is to invest it gradually over 6 to 12 months through a systematic transfer plan (STP).
Frequently asked questions
What is a lumpsum investment?
A lumpsum investment is a one-time investment of the full amount, rather than smaller monthly instalments. It is common when investing a bonus, an inheritance or sale proceeds.
How is lumpsum return calculated?
The calculator compounds your investment monthly at one-twelfth of the annual return you enter: FV = P × (1 + r ÷ 12)^(12 × years).
Is lumpsum better than SIP?
Over long periods, a lumpsum often ends higher because all the money compounds from day one. A SIP reduces the risk of investing everything at a market peak. Many investors combine both.
What is the value in today’s money?
It is the future value adjusted for 6% yearly inflation, so you can see what your corpus will actually buy in today’s terms.
Should I invest a large amount all at once?
Not always. A systematic transfer plan (STP) parks the money in a low-risk fund and moves it into equity funds over several months, which reduces timing risk.
Are these returns guaranteed?
No. The return you enter is an assumption for illustration. Mutual fund returns are market-linked and can be higher or lower. Taxes and fund expenses are not included.