A lump sum calculator is a financial tool used to estimate the future value or returns of a one-time investment made today. Unlike regular investments (like SIPs), a lump sum investment is a single, large deposit made into an investment option such as mutual funds, stocks, or fixed deposits.

How Does It Work?

The calculator typically requires three main inputs:

1. Investment Amount – The total one-time amount you plan to invest.

2. Expected Rate of Return (Annual) – The average percentage return you expect to earn annually.

3. Investment Duration – The number of years you plan to stay invested.

Using the compound interest formula, it calculates the future value:

$$FV = P \times (1 + r)^n$$

FV=P×(1+r)n

Where:

• FV = Future Value

• P = Principal (lump sum invested)

• r = Annual rate of return (in decimal)

• n = Investment duration in years

When to Use It?

Use a lump sum calculator when:

• You receive a large sum (e.g., bonus, inheritance) and plan to invest it.

• You're comparing long-term investment returns across different options.

• You want to set financial goals like retirement, child’s education, or buying a home.

Benefits

• Quick and easy return estimation

• Helps in goal-based financial planning

• Useful for comparing investment scenarios