Lumpsum is a large sum of money that is paid in one single go instead of small installment every month over time. Usually Lumpsum investments are undertaken by investor who are interested to invest a big amount for a time long period in a mutual funds.
How to calculate interest on Lumpsum investment ?
Formula to calculate interest for a Lumpsum investment
A = P (1+r/n)^nt
where, A stands for future value, P stands for present value or principal amount, r stands for interest rate, t stands for number of years the money is deposited for and n is the number of periods the interest is compounded each year.
What is the difference between Lumpsum and SIP?
A Lumpsum investment is a one-time investment in a selected scheme for a specified time duration. SIP is a systematic investment wherein a smaller amount is invested in a selected scheme every month for a specified time duration.