Retirement Planning From One-time Investment: How Rs 2.50 lakh lump sum investment may help generate Rs 75 lakh extra corpus for you

Power of Lump Sum Investment: When we start a periodic investment such as a systematic investment plan (SIP), our aim is to invest a fixed amount every investment cycle in a mutual fund or a bunch of funds. Many times, we also increase the investment amount when our income rises. An SIP investment is suitable for investors with a long-term investment horizon. If one has patience, they can see their investment grow multiple times more than the principal.

But if they want this corpus to further grow, making a lump sum investment of a few thousand or lakhs while starting an SIP investment may add a few lakhs of crores to their corpus in the long run.

If one makes a lump sum investment of Rs 2,50,000 while starting their Rs 15,000 monthly SIP investment, it may generate an additional Rs 75,00,000 corpus for the investor.

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Know how this transformation may be possible!

How SIP investment grows

Just see how an Rs 15,000 monthly SIP investment may grow in 30 years if the annualised rate of return is 12 per cent.

In 30 years, the total investment will be Rs 54,00,000, estimated capital gains will be Rs 4,08,14,598, and the estimated corpus will be Rs 4,62,14,598.

Rs 15,000 SIP investment table

How lump sum investment can grow in long run

Now take the example of a Rs 2,50,000 lump sum investment, and let's see how it grows in 30 years at a 12 per cent annualised rate of return.

In 30 years, estimated capital gains will be Rs 72,39,981, and the estimated corpus will be Rs 74,89,981.

Rs 2,50,000 lump sum investment growth chart

How Rs 15,000 SIP, Rs 2,50,000 lump sum investments can grow together

While a Rs 15,000 monthly SIP investment can generate an estimated corpus of Rs 4,62,14,598, the lump sum investment's value in the same time frame will be Rs 74,89,981. The cumulative estimated corpus thus will be Rs 5,37,04,579. So, you can see that a lump sum investment can increase in its value by 25 times, adding nearly Rs 75 lakh to a Rs 4.63 cr corpus.

Now, just see how the SIP corpus may grow further if, instead of making a lump sum investment of Rs 2,50,000, the investor invests Rs 3 lakh, Rs 4 lakh, or Rs 5 lakh.

If they make an Rs 3 lakh investment along with an Rs 15,000 SIP investment, the estimated extra corpus generated in 30 years will be Rs 89,87,977.

If they make an Rs 4 lakh investment along with an Rs 15,000 SIP investment, the estimated extra corpus generated in 30 years will be Rs 1,19,83,969.

If they make an Rs 5 lakh investment along with an Rs 15,000 SIP investment, the estimated extra corpus generated in 30 years will be Rs 1,49,79,961.

Investment tables of Rs 3-5 lakh upfront investments

Conclusion

The power of compounding shows its impact more emphatically in the long run, so making an upfront investment of a few extra thousand or lakh may create an extra corpus of many lakhs or crores.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)