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Lump Sum Investment Calculator (Multi‑Currency)
Lump Sum Investment Calculator
Investment Summary
Initial Investment
₹100,000
Final Value
₹0
Total Interest
₹0
Annualized Return
0%
About Lump Sum Investing
What is a Lump Sum Investment?
A lump sum investment involves investing a significant amount of money all at once, rather than spreading it out over time (which is called dollar-cost averaging). This approach can be beneficial when markets are expected to rise over the long term.
How to Use This Calculator
- Enter the amount you plan to invest as a lump sum
- Set the investment period in years
- Input your expected annual return rate
- Select how frequently returns are compounded
- Click "Calculate" to see your results
Key Concepts
- Compound Interest: Earnings on both your initial investment and accumulated interest
- Compounding Frequency: How often interest is calculated and added to your investment
- Annualized Return: The average annual return over the investment period
Compound Interest Formula
The formula used to calculate your investment growth is:
A = P × (1 + r/n)(n×t)
Where:
A = Final amount
P = Principal investment amount
r = Annual interest rate (decimal)
n = Number of compounding periods per year
t = Time in years
Frequently Asked Questions
Lump sum investing typically performs better in rising markets, while systematic investment plans (SIPs) can help reduce risk during volatile periods. Historical data suggests lump sum investing has outperformed SIP about two-thirds of the time over long periods.
This depends on your investment type and risk tolerance. Historically, stock markets have returned about 7-10% annually after inflation. Conservative investments like bonds typically return 3-5%. Your expected return should align with your investment strategy.
More frequent compounding leads to higher returns due to the "interest on interest" effect. For example, monthly compounding will generate slightly higher returns than annual compounding at the same interest rate.
Yes, taxes can significantly impact your net returns. This calculator shows pre-tax returns. Consult with a tax professional to understand how investment taxes apply to your situation.
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal plus accumulated interest, leading to exponential growth over time.