Lump Sum Investment Calculator
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The Power of the Lever: How Lump Sum Works
The ancient Greek mathematician Archimedes famously said, "Give me a lever long enough and a fulcrum on which to place it, and I shall move the world." A lump sum investment operates on a similar principle. Your initial capital is the force, but time is the long lever that multiplies its power through compounding.
Unlike a SIP where you add small amounts over time, a lump sum puts your entire capital to work from day one. Every bit of your money starts earning returns immediately. This can be incredibly powerful, especially over long periods, as the full weight of your investment benefits from every single cycle of compounding. This calculator shows you just how powerful that lever of time can be for your one-time investment.
Related Investment Tools
- SIP Calculator: Compare the outcome of investing smaller amounts regularly over time.
- Compound Interest Calculator: A detailed tool to explore different compounding frequencies.
- Investment ROI Calculator: Calculate the historical return on a past lump sum investment.
Frequently Asked Questions
What is a lump sum investment?
A lump sum investment is when you invest a significant amount of money all at once, rather than in smaller, periodic installments. This is common if you receive a bonus, inheritance, or sell an asset and want to put the capital to work immediately.
When is lump sum better than SIP?
Statistically, if the market is expected to go up over the long term, a lump sum investment will usually outperform a SIP because your entire amount of money is exposed to that growth for a longer period. However, this comes with higher risk.
What are the risks of lump sum investing?
The main risk is "timing risk." If you invest your entire capital just before a market crash, your portfolio could suffer a significant initial loss, and it may take a long time to recover. A SIP mitigates this risk by averaging your purchase cost over time.