What is a Lump Sum Investment?
A lump sum investment refers to investing a significant amount of money in a single go, rather than breaking it down into smaller, regular installments (like in a SIP). This approach is often taken when an investor receives a large sum of funds, such as a bonus, inheritance, or sale of an asset, and wishes to invest it to build wealth over time.
How Does the Lump Sum Calculator Work?
The lump sum calculator uses the compound interest formula to calculate the future value of your investment.
A = P × (1 + r/100)^n
Where:
- A is the final maturity amount
- P is the principal amount (initial investment)
- r is the expected annual rate of return
- n is the time horizon in years