Calculate the required size of a lumpsum investment needed to reach a target amount

What does this required lumpsum investment calculator do?

This calculator calculates the amount of money that is needed in order to reach a given target final amount if invested as 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. 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 sometimes impossible to accurately predict the value of a lumpsum invested as an SWP 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 investment, the value can be estimated with the help of a calculator under some assumptions.

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How is the required lumpsum investment estimated?

The 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. Basically we use the formula for compounding growth and solve for the required investment amount based off a given final value, duration and expected growth rate.

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What can ₹1,00,000 grow to at a growth rate of 10%?

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

1.      5 years: ₹62,092 (profit: ₹37,908)

2.      10 years: ₹38,554 (profit: ₹61,446)

3.      15 years: ₹23,939 (profit: ₹76,061)

4.      20 years: ₹14,864 (profit: ₹85,136)

5.      30 years: ₹5,730 (profit: ₹94,270)

6.      40 years: ₹2,209 (profit: ₹97,791)

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Note: Over longer periods, the compounding effects become noticeable, i.e. for smaller investment amounts, the profits accumulated over larger periods of time is larger as compared to larger investment amounts over shorter durations of time.

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Why is this required investment calculator special?

This required 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 it calculator useful?

This required 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 get a feel of the effects of compounding and to make better decisions.

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How do I use this calculator?

Instructions to use this calculator are provided above.

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Why should I use a required investment calculator?

This calculator is easy to use and can help you save time. It can help in retirement planning, wealth planning,  investment planning and many other ways.