1. What is SIP and Lumpsum Investment?

A Lumpsum investment is a single, one-time investment, while SIP (Systematic Investment Plan) involves regular, periodic investments. The calculator computes the future value for both types using compound interest formulas.

2. How the Calculator Works

The calculator uses these formulas:

Where:

• \( FV \) — Future Value
• \( P \) — Principal investment amount
• \( r \) — Periodic interest rate (annual rate divided by periods per year)
• \( t \) — Total number of periods (years)

Note: For SIP calculations, we assume investments are made at the beginning of each period.

3. Importance of Investment Calculation

Details: Understanding potential returns helps in financial planning, comparing investment options, and setting realistic financial goals.

4. Using the Calculator

Tips: Enter principal amount, annual interest rate, time period, and select investment type. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which gives better returns - SIP or Lumpsum?
A: Lumpsum generally performs better in rising markets, while SIP provides rupee cost averaging benefits in volatile markets.

Q2: Is the rate compounded annually?
A: Yes, the calculator assumes annual compounding for both SIP and Lumpsum calculations.

Q3: Can I calculate monthly SIP?
A: This calculator uses annual periods. For monthly SIP, divide the annual rate by 12 and multiply years by 12.

Q4: Are taxes considered in the calculation?
A: No, this is a pre-tax calculation. Actual returns may differ based on tax implications.

Q5: How accurate are these projections?
A: They're mathematical projections assuming constant returns. Actual market performance will vary.