Question 1

What is a lumpsum calculator?

Accepted Answer

A lumpsum calculator estimates the future value of a one-time investment — like a bonus, maturity payout, or inheritance — invested for a fixed period at an expected annual rate of return, using yearly compounding.

Question 2

How is lumpsum different from a SIP?

Accepted Answer

A lumpsum investment puts the entire amount to work on day one, so it benefits fully from compounding over the whole period but is also fully exposed to market timing risk. A SIP spreads the same money across many months, averaging your purchase price but giving later instalments less time to compound.

Question 3

Is lumpsum or SIP better?

Accepted Answer

Neither is universally better — a lumpsum invested right before a market fall can underperform an SIP, while a lumpsum invested during a rising market can outperform. If you already have the money and a long horizon, lumpsum has a slight statistical edge on average; if you're uncertain about timing, SIP smooths that risk.

Question 4

What return rate should I assume for a lumpsum investment?

Accepted Answer

The same guidance as SIPs applies: equity mutual funds have historically returned 10-14% annually over long periods, though nothing is guaranteed. A conservative 10-12% assumption gives a more realistic projection than assuming peak historical returns.

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