Set an expected inflation rate to see what the final amount is really worth in today's money, and plan for horizons of up to 60 years.
How lumpsum returns are calculated
FV = P × (1 + r)ⁿ | Real value = FV ÷ (1 + inflation)ⁿ
- P
- Amount invested once
- r
- Expected annual return
- n
- Number of years
- Real value
- Maturity value in today's money
Returns are compounded once a year. Actual mutual fund returns vary from year to year, so treat the result as a planning estimate.
Investing a lump sum all at once can earn more than a SIP when markets rise steadily, but carries more timing risk. Many investors split a large amount across a few months through a systematic transfer plan.
Lumpsum or SIP?
Both are good ways to invest; the right choice depends on how you receive money and your comfort with volatility.
- Lumpsum suits windfalls and long horizons when you can stay invested through falls.
- SIP suits regular monthly income and spreads out your entry price.
- A systematic transfer plan (STP) from a liquid fund combines both approaches.