How Lumpsum Compounding Works
Unlike a Systematic Investment Plan (SIP) where you invest in smaller monthly tranches, a lumpsum investment involves deploying a bulk amount of capital into an asset class all at once. This strategy is highly effective when you have a sudden influx of cash (like a bonus or asset sale) and want to maximize the time your money spends in the market.
The Calculation Formula
Our Lumpsum Calculator utilizes the universal compound interest formula:
FV = P × (1 + r)n
- FV = Future Value (Your projected wealth)
- P = Principal (Your initial one-time investment)
- r = Annual Expected Rate of Return
- n = Number of Years