Lumpsum vs SIP Comparator
Got a lump sum? Compare investing it all at once versus spreading it as a monthly SIP over the same period.
Runs entirely in your browser — your numbers never leave this page.
How it works
With the same total amount and the same return rate, the difference is pure time in the market:
- Lumpsum: the full amount compounds from day one —
P × (1+r)n. - SIP: money trickles in monthly, so the average rupee is invested for only half the period.
- In a rising market lumpsum wins mechanically — studies show ~65-70% of the time over long periods.
- But: if the market crashes right after you invest the lumpsum, SIP's rupee-cost averaging wins. Lumpsum maximizes expected value; SIP minimizes regret.
- The compromise: invest the lumpsum in 6–12 monthly tranches (a "STP-like" approach) — most of the time-in-market benefit, less timing risk.
- Tax note: both are taxed identically (equity LTCG/STCG rules) — tax doesn't decide this one.
Frequently asked questions
Is lumpsum or SIP better?
In rising markets lumpsum wins (~65-70% of the time) because more money compounds longer. SIP wins when markets fall early. It's a bet on market direction, not just math.
How is lumpsum future value calculated?
P × (1+r)^n — the full amount compounds for the entire period. SIP uses the annuity formula since money enters gradually.
I got a bonus — invest all at once?
If you won't panic in a 20% drawdown, yes — expected value favors lumpsum. If a crash would make you sell, split it into 6–12 monthly investments.
Does SIP give rupee cost averaging?
Yes — fixed monthly amounts buy more units when prices fall, fewer when they rise. That's SIP's real edge in volatile markets.
What about STP (systematic transfer plan)?
Park the lumpsum in a liquid fund and STP monthly into equity — the classic middle path: earns ~6-7% while waiting instead of 0% in savings.
Is the tax treatment different?
No — equity lumpsum and SIP investments face identical STCG (20%) and LTCG (12.5% above Rs 1.25L) rules.
Which is better for 1 year?
Neither should be in equity for 1 year — too volatile. For short horizons use debt/liquid funds regardless of route.
Does this work for debt funds too?
Yes, the math is identical — but the return gap shrinks since debt returns are lower and steadier.
What if I invest the lumpsum in parts?
That's the STP approach — enter your tranches as a "SIP" with fewer, larger installments to compare precisely.
Can SIP ever beat lumpsum at the same rate?
Only if the assumed constant rate doesn't hold — i.e., real markets where early crashes let SIP buy cheap. At a truly constant rate, lumpsum always wins.