1. What is a Lumpsum Return Calculator?

Definition: This calculator determines the percentage return on a lump sum investment by comparing the future value to the original principal amount.

Purpose: It helps investors quickly assess the performance of their lump sum investments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Return} \) — Percentage return on investment
• \( FV \) — Future value of the investment ($)
• \( P \) — Principal amount invested ($)

Explanation: The formula calculates the profit/loss as a percentage of the original investment.

3. Importance of Lumpsum Return Calculation

Details: Understanding investment returns helps in evaluating performance, comparing different investments, and making informed financial decisions.

4. Using the Calculator

Tips: Enter the future value and principal amount in dollars. Principal must be greater than $0.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good return on investment?
A: This depends on the investment type and timeframe. Generally, returns above inflation (2-3%) are positive, while 7%+ is considered good for long-term stock investments.

Q2: Can the return be negative?
A: Yes, if the future value is less than the principal amount, the return will be negative indicating a loss.

Q3: Does this calculator account for time?
A: No, this is a simple return calculation. For annualized returns, you would need to know the investment period.

Q4: What's the difference between lumpsum and SIP returns?
A: Lumpsum calculates return on a single investment, while SIP (Systematic Investment Plan) calculates returns on multiple periodic investments.

Q5: How is this different from CAGR?
A: This shows total return, while CAGR (Compound Annual Growth Rate) shows the smoothed annual growth rate that would achieve the same final value.