SIP Calculator and Lump Sum Calculator are the two most popular investment and financial planning instruments that enable an investor to plan his financial and investment framework based on his financial capacity.

What does the SIP calculator help investors to find?

The SIP Calculator allows the investors to find the estimated returns on investing a fixed amount, either weekly or monthly or quarterly, on any financial product like mutual fund or stock, during a fixed term.

- Investment: Enter the amount of investment: ((enter the original fixed amount you’ll invest every investment period like $1,000 every month.
- Frequency of input investment: Please enter the frequency of input investment, which is monthly, every three months, half a year or once a year.
- Projected annualised return: The expected return of the fund on which the money invested, the result of the track record and the future perspective. For investors put the figure for the purpose of this item (eg 10 per cent).
- Initial investment period: Enter the full time period invested. For example, 10 y, 15 y, 20 y.

Now, it can use the three inputs given above to figure out the amount invested in total, the total returns you get and the amount you end up with at the end of your investment period. SIP involves rupee cost averaging – the process of investing a fixed amount of money at different times in a prevailing market situation. This approach helps de-risk the volatility of the markets over the longer term.

- for those with low initial investment budget.SIP is a good mechanism for investors to participate in the stock market. As SIP allow investors to make small investment once in a given period, those investors with low initial investment budget can also participate in investing and finally get the returned income.
- Long-term investors: The SIP Calculator shows the power of investing for the long term: how through regular investments you can get compounding to work for you. You can really reap rewards in the longer term.
- Risk-averse investors: as SIP adopts an investment strategy of diversification and keeping an average price, SIP can reduce the investment risk to a certain extent, and it can suit the needs of the risk-averse investor.

Lump Sum Calculator calculates the returns that an investor can generate by investing one lump sum. Unlike the SIP calculator, where the summarised investment amount is made up through a regular SIP, the Lump Sum Calculator suggests that an investor invests one big amount at the beginning itself.

- $ you will invest: Investors are asked to enter the amount in US dollars that they will put aside in a lump sum, for example $500,000.
- Expected annualised rate of return: It’s up to investors to plug in the annual rate of return they expect from the historical performance and future prospects of the underlying financial product(s) on which they are betting (for example, 10 per cent).
- Input investment period: You have to put in the number of years you plan to invest for, eg 10 yrs or 15 years or 20 years.

According to the mentioned inputs, the Lump Sum Calculator calculates the total payment that will be gained at the end of the investment period. Since the amount that is invested under the lump sum, is quite a large amount, it is noticeable that the investors will have a higher percentage as their winning returns. Also, the disadvantage of making a one time investment, is that these investors must face more risks of the market volatility as the period under which the investment is made is quite a big date.

- Big-wallet investors: Investors who have a large sum unused to hand and wondering whether to invest it all at once could try the Lump Sum Calculator.
- Risk takers: Since the probability of risk exponentially increases with a one-time investment for the foreseeable future, risk takers may be more appropriate to use the Lump Sum Calculator.
- Short-term investors: If investors are going to recoup their investment in a year or two, or even three years, they can use the Lump Sum Calculator to see historical returns from a one-time investment.

1. SIP Calculator: This calculator works only if you intend to a small amount regularly. If you are treating yourself and you are willing to make a major purchase in a single payment, then the Lump Sum Calculator might be for you.

2. Risk towards investment : Risk that exists towards investment can be reduced considerably by splitting the investment amount into multiple parts through SIP Calculator and also can buy the same portfolio ataverage investment cost.In case of Lump Sum Calculator, it will take the entire risk from the ups and downs in the market considering its high investment cost and hence it is less expected to be in a high risk zone.

3. Number of years of investment:As the SIP Calculator works on the principle of regular investment over periods of time and on decades-long investment and takes ‘the benefit of compounding’,they are more suitable for long term investments. On the other hand, the Lump Sum Calculator works equally well for short term and long term investment.

4. Returns: As the corpus in lump sum being the higher, its investment returns are higher, but so is the risk. The return aged 50 for the SIP calculator is stabilised moderately though always below the Lump Sum Calculator.

5. Type of investor: By targeting a long-term investor, who has less capital to begin with and is risk-averse, the SIP Calculator is applicable: Lump Sum Calculator = total capital invested x x% per year x Compounding period (years) Discovered through online financial investing apps, including on the end-of-chapter textbook questions in Principles of Macroeconomics teaching supplements. The Lump Sum Calculator, tailored for a short-term or long-term investor, who has more capital to begin with and is risk seeking, is applicable: SIP Calculator = (how much = 100 dollars x % per annum ÷ number of annuities per year) x compounding period (h = or years) End-of-chapter textbook questions in Principles of Macroeconomics teaching supplements.