The formula this page uses
The result is a single compound-interest expression. For an amount P that earns an annual return r for n years, the final value is P multiplied by one plus r, raised to the power n. This page compounds the return once a year, not month by month or day by day. That matches how mutual fund growth is quoted in CAGR terms in a fact sheet, and it is the convention used across the mutual funds group of calculators here.
The gain is the final value minus P. The multiple of invested is the final value divided by P, which is a cleaner way to feel the compounding than a rupee figure. At 12 per cent for 10 years, one rupee becomes about 3.11 rupees. At 12 per cent for 20 years, it becomes about 9.65 rupees. The last 10 years matter more than the first 10.
Worked example you can check
Take ₹1,00,000 invested once, an assumed return of 12 per cent and a 10-year term. The factor is 1.12 raised to the power 10, which is about 3.1058. So the final value is about ₹3,10,585 and the gain is about ₹2,10,585. The last column of the table below gives the balance at the end of each year.
| Year | Factor | Balance |
|---|---|---|
| 0 | 1.0000 | ₹1,00,000 |
| 1 | 1.1200 | ₹1,12,000 |
| 5 | 1.7623 | ₹1,76,234 |
| 10 | 3.1058 | ₹3,10,585 |
Move the term to 15 years and the factor is 5.4736, so the balance is about ₹5,47,357. Doubling the term has not doubled the balance; it has roughly multiplied it by 1.76 again.
Lump sum against a SIP of the same money
Take the same ₹1,00,000 and spread it as a SIP over 10 years. That is ₹833 a month. At the same assumed return of 12 per cent, using the start-of-month convention of the SIP calculator with a monthly rate of annual divided by 12, the SIP reaches about ₹1,93,616 at the end of 10 years. The lump sum on the same assumptions reaches about ₹3,10,585.
The lump sum wins by a wide margin because every rupee earns from day one, while the SIP money arrives gradually and much of it has not finished compounding at the end. Read the comparison carefully. It is a statement about the shape of the arithmetic at a steady rate, not about markets, which do not move in a straight line. If the market falls in year one, the lump sum sees the whole drawdown and the SIP does not, so the real question is one that this page cannot answer.
Inflation-adjusted value
Switch on the inflation view and the final figure is divided by one plus the assumed inflation rate, raised to the power of the term, giving the result in today's money. At the default 6 per cent inflation for 10 years, the factor is 1.7908, so the ₹3,10,585 final value is worth about ₹1,73,429 in today's buying power. The nominal gain is ₹2,10,585 but the gain in real terms is only ₹73,429. India's Consumer Price Index (new base 2024=100) posted a headline rate of 5.54 per cent in September 2026 (MoSPI). RBI's target band is 2 to 6 per cent (Section 45ZA of the RBI Act), reviewed for the period 1 April 2026 to 31 March 2031. Six per cent is only a working assumption; your real household basket may rise faster or slower.
Sensitivity at plus and minus 2 per cent
The assumed rate is the single most important input. Hold the same ₹1,00,000 for 10 years and run the arithmetic at three nearby rates:
| Assumed return | Final value | Gain |
|---|---|---|
| 10 per cent | ₹2,59,374 | ₹1,59,374 |
| 12 per cent | ₹3,10,585 | ₹2,10,585 |
| 14 per cent | ₹3,70,722 | ₹2,70,722 |
Two percentage points on either side swings the final value by roughly ₹60,000, or about 20 per cent of the mid case. A fund's own past returns in its fact sheet describe what has happened and carry no promise about what comes next, which is why this calculator never calls the result an expectation.
Tax on redemption
A lump sum that buys mutual fund units is taxed only when units are redeemed, not while they compound on paper. For an equity-oriented fund (65 per cent or more domestic equity), units held for more than 12 months are long-term, taxed at 12.5 per cent above an annual exemption of ₹1,25,000 across listed equity and equity funds; units held up to 12 months are short-term at 20 per cent. This regime has been in force since 23 July 2024 and continues under the Income-tax Act 2025 (in force 1 April 2026).
Debt mutual fund units bought on or after 1 April 2023 are taxed at your slab rate, with no indexation, whatever the holding period. Surcharge on capital gains is capped at 15 per cent, and a 4 per cent health and education cess applies on top. Your own position, including other deductions and surcharge bands, sits outside this page. Confirm the figure with a qualified chartered accountant before acting on it.
What this calculator leaves out
- The expense ratio of the scheme, which reduces the return actually credited to the units. Direct plans cost less than regular plans.
- Exit load, if the units are sold inside the no-load period set by the scheme.
- Any top-up to the original amount. To mix lump sums with a SIP, use the investment calculator when it is live.
- A rate that changes from year to year. This page compounds at one steady rate across the term.
- Your own tax surcharge, cess and other income heads.
Frequently asked questions
What does a lump sum calculator do?
It grows a one-time investment at an assumed annual return for a stated number of years, with annual compounding, and shows the final value, the gain and the multiple of the amount invested.
What compounding does this page use?
Annual. The amount is multiplied by one plus the annual rate, raised to the power of the number of years. That matches how mutual fund CAGR is reported in a fact sheet.
Is a lump sum better than a SIP of the same total money?
At a steady assumed rate the lump sum always comes out larger because every rupee has earned from day one. That is arithmetic. Markets do not move at a steady rate, so the real-life answer depends on the path, which no calculator can predict.
What does the inflation-adjusted value mean?
The future rupee is worth less than today's rupee. Dividing the final value by one plus the assumed inflation rate raised to the power of the term restates it in the price level of today, so it can be compared with current expenses.
How is a lump sum in a mutual fund taxed?
Only on redemption. For equity-oriented funds, units held above 12 months are taxed at 12.5 per cent above a ₹1,25,000 yearly exemption, and units held 12 months or less at 20 per cent. Debt fund units bought on or after 1 April 2023 are taxed at slab rate, with no indexation, whatever the holding period.
Why does the chart start at year zero?
So the initial amount appears at its value on day one, before any return has been earned. Each subsequent year adds one round of compounding.
Does the page use inflation in the main figure?
No. The main figure is nominal, at the assumed rate of return. Switch on the inflation toggle to see the figure restated in today's money, using an assumed rate you can edit.
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