Lumpsum Investing Explained
A lumpsum investment means putting in a single large amount at once, rather than spreading it across monthly instalments like a SIP. It works best when you have a windfall — a bonus, maturity proceeds, or accumulated savings — and the market timing is favourable.
Returns on a lumpsum compound over the full investment period, which is why even a moderate annual return can multiply your money significantly over a long horizon. The formula used is FV = P × (1 + r)^n.
Frequently Asked Questions
Which is better — SIP or lumpsum?
SIP averages out market volatility and suits regular earners. Lumpsum can deliver higher returns if invested when markets are low, but carries timing risk. Many investors use both.
Are lumpsum mutual fund returns guaranteed?
No. Returns depend on market performance. The calculator uses an assumed annual return for estimation only.