Lumpsum investment calculator (Lumpsum calculator) – Calculate returns from a lumpsum investment

Frequently Asked Questions

 

What is a lumpsum investment?

A lumpsum investment is when an amount of money is invested directly in some instrument like shares, bonds, fixed deposits, gold, etc at a point of time, e.g. ₹10,00,000 is invested on 12.1.24. In a lumpsum investment, a lumpsum of money is invested which then grows under the effect of compounding. The investment can be in a mutual fund, a stock, fixed deposit (provided it allows compounding and a cumulative pay-out on maturity) etc.

 

In a lumpsum investment, the lumpsum grows at some growth rate across the period for which the investment is held. The growth rate may be constant, e.g. in a fixed deposit, or variable like in a stock or mutual fund investment. Depending market conditions, this growth rate may also be positive (you make money), 0 (you neither make nor lose money) or negative (you lose money). Practically speaking, the growth rate in the real world is not uniform and may fluctuate over time. While calculating the future value of a lumpsum, we implicitly assume a cumulative average growth rate (CAGR).

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It is basically impossible to accurately predict the value of a lumpsum investment for a given duration as this depends on the growth rate, when growth is positive, negative or 0, and for how long that growth rate applies. However, for investment planning purposes and to get an idea of the expected return on the lumpsum investment, the value can be estimated with the help of a calculator under some assumptions.

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How is the future value of a lumpsum investment estimated?

There formula that can be used to estimate the future value of an lumpsum investment along with an explanation of the  terms is provided above. This formula assumes compounding growth on the lumpsum invested.

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What does a lumpsum investment of ₹100,000 grow to over time?

Assuming a lumpsum investment of ₹100,000 and a growth rate of 10%, here are some outcomes, i.e. future values of an lumpsum investment for different periods of time:

1.      5 years: ₹1,61,052 (profit: ₹61,052)

2.      10 years: ₹2,59,375 (profit: ₹1,59,375)

3.      15 years: ₹4,17,725 (profit: ₹3,17,725)

4.      20 years: ₹6,72,750 (profit: ₹5,72,750)

5.      30 years: ₹17,44,941 (profit: ₹16,44,941)

6.      40 years: ₹45,25,926 (profit: ₹44,25,926)

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Note: Over longer periods, the compounding effects become noticeable, e.g. The profits accumulated between year 30 and year 40 is significantly larger than between year 20 and year 30 even though in both cases exactly 10 years passes by.

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Note: This calculator can be used with a negative yearly growth rate as well to view the impact of inflation on the purchasing power of money, e.g. ₹100,000 left alone at an inflation rate of 5% (-5 needs to be typed in the yearly growth rate field) has a value of ₹90,250 after 2 years of time.

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Why is this lumpsum calculator special?

This lumpsum investment calculator is special because it is very easy to use and is available online on a website that also hosts a whole bunch of other financial and investment related calculators which will make it easier for you to calculate whatever you need.

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Why is a lumpsum calculator useful?

This online lumpsum investment calculator is useful as it can help with retirement planning, monthly budgeting, or investment planning. It's also a good way for beginners and professionals alike to easily estimate the future value or returns from a lumpsum investment over a given period, to get a feel of the effects of compounding, or to make better decisions.

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You can also assume a negative yearly growth rate to see what the impact of inflation would be on your money.

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How do I use this lumpsum calculator?

Instructions to use this lumpsumor one time investment calculator are provided above.