Power of Compounding: How soon can you expect to generate Rs 3,00,00,000 corpus with Rs 4 lakh lump sum investment?
So far, we have been learning about SIPs and how a monthly investment through a Systematic Investment Plan can help you build a sizeable corpus. Now, it's time to explore the power of lump sum investment. Let's find out how a lump sum investment of Rs 4 lakh can grow into a Rs 3 crore corpus and how long it may take to build this amount.
Imagine you receive a large bonus. Instead of saving it in your bank, you decide to invest. This is where lump sum investment comes in – a way of investing a particular amount of money all at once, rather than spreading it out over time like a monthly investment. It is a one-time investment of a sum, unlike Systematic Investment Plans (SIPs), where smaller amounts are invested regularly. Lump sum investing is suitable for investors who have a large sum of money to invest at once, such as from bonuses, inheritances, or asset sales. With that in mind, let's find out how many years it may take to generate a Rs 3 crore corpus with a lump sum investment of Rs 4 lakh.
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What is lump sum investment?
A lump sum investment involves investing a large sum of money all at once, rather than in installments. This does not take into account any breakage of the available amount or instalments.
How does lump sum investment work?
Investors have to invest a specific amount in a single point, without any further payments. They have to invest the entire amount based on their assessment of current market conditions.
Benefits of lump sum investment?
Simple and efficient - It is a straightforward way to invest a significant amount of money in a single transaction.
Capitalising on market opportunities - If investors feel the market is likely to rise, investing a lump sum can allow them to quickly benefit from the potential increase.
Factors to consider before investing in lump sum investment
Risk tolerance
Market conditions
Investment goals
Performance of the fund
Lump sum investment calculation conditions
Target corpus: Rs 3 crore corpus
Lump sum investment: Rs 4 lakh
Annualised return: 12 per cent
How long it may take to generate Rs 3 crore corpus with lump sum investment of Rs 4 lakh?
It may take approximately 39 years to generate this corpus.
What would be your corpus in 10 years with Rs 4 lakh lump sum investment?
The investment amount will be 4,00,000, the estimated capital gains in 10 years will be 8,42,339, and the estimated corpus in 10 years will be Rs 12,42,339.
What can be your corpus in 20 years with Rs 4 lakh lump sum investment?
The investment amount will be 4,00,000, the estimated capital gains in 20 years will be 34,58,517, and the estimated retirement corpus in 20 years will be Rs 38,58,517.
What may be your corpus in 30 years with Rs 4 lakh lump sum investment?
The investment amount will be 4,00,000, the estimated capital gains in 30 years will be 1,15,83,969, and the estimated retirement corpus in 30 years will be Rs 1,19,83,969.
What can be your retirement corpus in 39 years with Rs 4 lakh lump sum investment?
The investment amount will be 4,00,000, the estimated capital gains in 39 years will be 3,28,32,489, and the estimated retirement corpus in 39 years will be Rs 3,32,32,489.