Use this free Lumpsum SIP Calculator to get the future value of you investment. Just need to enter the Lumpsum amount invested, enter expected return, enter investment period (in months) and choose the interest earned (If you are getting interests more than annually)
For example: every half-yearly enter 2, quarterly enter 4, monthly enter 12 etc.). Usually the interest are paid only once in a year.
The lumpsum SIP calculator will tell you the future value of your investment as well as the total wealth gained on the initial investment you made.
What Is SIP?
In layman terms SIP (Systematic Investment Plan) is a way to invest certain amount either monthly or lumpsum (onetime) in any mutual fund, to get the maximum return on invested capital. An SIP can be as low as ₹500 and can be invested at predefined intervals such as weekly, monthly, quarterly, semi-annually, annually.
The most common SIP’s are monthly SIP and lump sum SIP. This facility is offered by mutual fund companies to investors, in order to invest their money systematically in any given fund.
Difference Between SIP And Mutual Fund?
Many people think SIP and mutual fund are two different things, however SIP is just a method of investing a fixed money at predefined intervals in a mutual fund scheme. So, SIP’s are nothing but a way to invest your money in mutual funds.
What Is Lumpsum SIP?
Lumpsum SIP are those which are invested one time in any mutual fund scheme for a long-term duration. Generally, it is a significant amount that one invest, instead of monthly SIP’s which involves small amount at regular intervals.
So, instead of investing ₹500 every month in a SIP for 5 Years, you invest ₹30,000 (may be more) at once.
Why Invest Through Systematic Investment Plan(SIP)?
There are many types of investment that can be made in different financial instruments such as Stocks, Bonds, ETF etc. However, investing is not everyone’s cup of tea, understanding the fundamentals(reading balance sheets, cashflow, profit-loss statement, annual reports etc. as well as doing technical analysis to choose stocks and create a portfolio takes time, learning and energy.
Instead, you can choose the list of different mutual funds schemes offered by the various Asset Management Companies(AMC) such as SBI, HDFC, UTI, AXIS, ICICI etc. and invest in them in a systematic way. This way is much better as you would be better disciplined with less risk.
What Is Lumpsum SIP Calculator Formula?
The lumpsum sip calculator formula is:
A = P (1 + r/n) ^ nt
In the above lumpsum sip calculator formula:
A= Total Amount Receivable(at the end)
P= Total Amount Invested(initially)
R= Rate of Interest
T= Time(invested period)
N= No. of times the compound interest you receive in a year(yearly, half-yearly, quarterly, monthly)
Whenever you want to calculate your mutual fund return for lump sum SIP’s you can use this formula. Let us take an example:
Suppose, you have invested Rs. 5 Lakh in a mutual fund scheme with a expected return of 12% for 10 year period and the interest compounding every year.
Total Amount Receivable(at the end)(A) = 500,000*(1+12.5/2)^2*10
A = Rs. 1,552,924
Below is the growth rate chart for the above lump sum SIP calculation:
However, calculating this manually will take much time, that is why you should use the free lumpsum SIP calculator given above on moneycontain. This will save your time as well as its much reliable comparing to do manual calculation.
What Are The Benefits Of Lumpsum SIP Investing?
Let us understand this through an example:
There are two friends name Amit and Vivek, both started working at the same age 25. Both decided they have to save some money from their salary and deposit that in best mutual fund scheme for long duration. However, it is not easy being a youth to save money (I can relate), but vivek was firm at his decision.
He advised amit to save some money till they reach their 30’s and both will invest that money till age 55. Once the amount will get matured they both will go on world tour with that money. They both decided to save 40,000 every year for 5 years in order to save Rs.2 lacs.
After 5 years when both reached at the age of 30, vivek asked amit about the saving, amit due to his nature of spending more than what have not able to show up the amount.
However, Vivek was firm on his decision, he invested that money(Rs.2 lacs) as a lumpsum in a fund through SIP. Amit regretted the decision he made, he thought it’s ok, let me start saving from this year and I will invest Rs.2 lacs at the age of 35.
He thought there won’t me much difference as vivek is only 5 Years ahead.
Below is the chart telling you the mistake Amit made by not understanding the power of compounding.
Vivek total wealth earned when he reached 55= ₹34 lacs(approx.)
Amit total wealth earned when he reached 55 = ₹ 19,29,258
Can you believe the difference is of just 5 years but the impact it made was very huge. That is why Nobel Prize winner in Physics Albert Einstein quoted “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.”
The earlier one starts saving and investing regularly, the easier it is to achieve your goals.
What Is The Power Of Compounding Means?
If you ask any person older than you what they wish they had more of, most probably they will tell you they wish they had more time.
Compound interest affects everyone the same, because it depends on time.
Millionaires around the world know how to mobilize the power of compound interest. Don’t think they are much smarter than you, harder working than you, or have any magic wand with them .
They just understand how compound interest works and they use it to the fullest.
Compounding effect assures that you earn returns not only on your principal amount (actual investment) but also on the gains on the principal amount i.e. your money grows over time as the money you invest earns returns. And the returns also earn returns.
The above formula for lumpsum SIP calculator is based on Compound Interest. You can read how Compounding works here and can use moneycontain compound interest calculator as well.
The next question which seems to come to your mind is interest rates and inflation. let us discuss them one by one.
Lumpsum SIP Calculator With Inflation:
Many investors who invest money through SIP’S whether lump sum or monthly, doe not count the rate of inflation.
Most first time investor miss this point, they only think, ok this will be the amount i would be getting at the end of my mutual fund scheme. However, with time the value of money changes , what i means to say the value of Rs.100 after 25 Years would not be the same.
Due to inflation the prices or goods of any economy or country increase over a period of time. Hence you should account inflation while calculating your SIP returns.
To account inflation in your future value investments either drop the expected rate of return on investment, for example, if you are expecting 15% return on your investment you need to subtract the inflation rate for same period.
So, let say the average inflation for last 5 years is 3.5% so instead of taking 15% expected return, you count your return on 12.5%. You can get the inflation rate from here for India.
To find the real interest rate, we take the nominal interest rate and subtract the inflation rate.
Real interest rate = nominal interest rate − inflation rate.
However the above method to calculate the inflation is the basic estimation, as inflation and returns compound the correct way or formula to calculate inflation adjusted return is given below:
Inflation-adjusted return = (1 + Return) / (1 + Inflation) – 1
Applying the formula by using above no.
(1+15%)/(1+3.5%)-1= 11.11%, this is correct return you should expect on your investment post inflation.
Checkout the impact of inflation on your returns as well as your life using moneycontain inflation rate calculator and calculate your future expenses easily.
At the same time there is another method or concept called present value or discounting, this helps you in knowing the (PV) present value of your future investments.
Calculate the present value of your future investment using moneycontain present value calculator.
Is SIP safe?
To be very honest and blunt nothing is safe if you want to earn more, there has to be some risk involved while expecting higher returns on your investment. Having said that investing a mutual fund scheme can be better than investing in any individual stock without research.
Which Is better Monthly SIP or Lumpsum?
Monthly SIP is better because of the “Rupee Cost Averaging” concept. Rupee Cost Averaging allows an investor to take advantage of the market volatility. By investing in a SIP, an investor gets more units when the Net Asset Value (NAV) is less and less units when the NAV is high. This brings down the average cost of the units over the long term.
Having said that Lumpsum SIP has its own advantage if you are buying it at the right time in right fund and when the Net Asset Value (NAV) is less which means you will have more units at a particular price and in long duration the NAV will be higher creating a bigger profit.
Another things with lump sum SIP is, there is no headache for every month keeping certain money in your account to maintain the SIP. You may feel like paying an installment of something.
How Accurate is Moneycontain Lumpsum SIP Calculator?
It is as accurate as it should be, you can compare it with any other recognized online lumpsum calculator of a bank or mutual fund providing companies such as Bajaj Finserv here.
My Opinion On Lumpsum SIP:
I hope you now have understood the concept of SIP as well as the role of lumpsum SIP for an investor. You are free to use the lumpsum sip calculator on moneycontain anytime you want to calculate your returns.
SIP whether monthly or lumpsum is a great way to beat inflation and have some emergency fund for future. Suppose you have a child who is 5 Years old now, you can make an lumpsum SIP for his/her future education, so when he/she reaches at age 20 you do not need to worry about education cost.
Let say you have only Rs.1 lac saved and invested when he was 5 years old expecting a nominal interest rate of 12% till he/she reaches 20. Below is the calculation done from Lump Sum SIP Calculator
Update: Calculator updated to give results in Months Instead of Years now
After 15 years you will have at least Rs.5.50 Lacs which can be used in anything related to education or buying a car for her/him. Even its a hatchback you feel great to give it as a surprise gift??.
Incase you are looking to buy home than do not forget to check moneycontain home loan calculator which tells you your monthly EMI’S, interest need to pay on sum borrowed and lot more.
Looking to make Monthly SIP Instead of lumpsum then do check and calculate the future value of your SIP by using moneycontain monthly sip return calculator here.
Thinking of making a Recurring deposits (RD) each month then know the best banks offering highest returns for RD and also calculate the return by using moneycontain free monthly RD calculator here.
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Note: Please do not take this as any recommendation, to trade or invest. This is just for reference, to make you understand more about the Lumpsum SIP calculator and its importance, under no circumstances intended to be used or considered as financial or investment advice, a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset.
Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only. All investments are subject to risks, which should be considered prior to making any investments.