Calculate returns on one-time investments
Lumpsum investment means investing a large amount at once rather than periodically. It's suitable when you receive windfalls like bonus, inheritance, or property sale proceeds. Returns depend on market conditions at entry—timing matters more than in SIP.
Lumpsum works better in rising markets as all money is invested early. SIP is safer as it averages costs over time. For long-term (5+ years), both perform similarly. Use SIP for regular income, lumpsum for windfalls. Consider combining both strategies.
Ideally during market corrections (10-20% drop from highs). However, timing markets is difficult. If you have lumpsum and long horizon, investing immediately beats waiting for 'right time' in most cases. Time in market trumps timing the market.
Future Value = P × (1 + r)^n, where P is principal, r is annual return rate, n is years. For ₹1 lakh at 12% for 10 years: FV = 100000 × (1.12)^10 = ₹3,10,585. CAGR measures the annualized growth rate of your investment.
Market timing risk—investing at peak means potential losses initially. Sequence risk—early negative returns impact final corpus significantly. Mitigation: invest in diversified funds, maintain long horizon (7+ years), avoid investing emergency funds.
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