SIP vs lumpsum: same money, two ways in

Published rates read from the issuer's own pages on 29 September 2026. Every figure in the table is computed, not quoted. We make a money-tracking app; we do not sell either product on this page and we are not financial advisers.

The numbers

Both columns use the same Rs 12,00,000 and the same assumed 12%; the only difference is how long each rupee is invested, which is exactly what the choice is about. The table starts at ten years because that is when the monthly column has finished paying in its Rs 12,00,000 — comparing them before that would set the full sum against a part of it. The smaller figure under a projected column is the same sum at 8% — what a poor decade can look like. Neither figure is a promise. Computed on 29 September 2026; rounded to the rupee.

The rates used, and what they are worth

• equity mutual fund: 12% (an assumption, not a rate anyone offers) — An assumption used to project, not a rate. Equity funds can and do fall; a projection is not a promise and past returns do not carry forward.
• equity mutual fund: 12% (an assumption, not a rate anyone offers) — An assumption used to project, not a rate. Equity funds can and do fall; a projection is not a promise and past returns do not carry forward.

When the lump sum is the better choice

• The money is already sitting in a savings account earning 2.5% to 3%. Every month it waits is a month it is not compounding.
• Your horizon is long. The longer the period, the more the extra time in the market matters and the less the entry point does.
• You will not check the balance weekly. A lump sum that falls 20% in month two is survivable only if you leave it.

When spreading it is the better choice

• The money arrives monthly anyway — a salary. Then there is no choice to make: a SIP is the only option, and this comparison does not apply to you.
• A large fall right after you invest would make you sell. Giving up some expected return to protect the plan from yourself is a real return.
• The amount is large relative to everything else you own. Halving a year of savings is different from halving a tenth of your net worth.
• You are investing near a peak you would regret. Nobody can identify a peak in advance, but regret is a real cost and spreading the entry lowers it.

Questions

Does a SIP beat a lump sum in a falling market?

Yes, and that is the whole case for it. If prices fall after you start, each instalment buys more units, so your average cost is lower than the price on day one. If prices rise steadily, the opposite happens and the lump sum wins.

What is a STP and should I use one?

A systematic transfer plan parks the lump sum in a debt or liquid fund and moves a fixed amount into equity each month. It is a middle path: the waiting money earns more than a savings account while the entry is still spread. It adds an extra product and its own tax treatment, so it is worth the complexity mainly for larger amounts.

Which does the arithmetic favour?

The lump sum, on average, because more money is invested for longer. The table shows how much. What the arithmetic cannot show is the path — the lump-sum column would have looked very different if you had invested it the month before a crash, and the average hides that.

Is there a tax difference?

Not in the rate. Each SIP instalment is its own purchase with its own holding period, so early instalments become long-term before later ones. That matters when you sell in stages, and it means a partial redemption is not taxed at one uniform rate.

Run it on your own numbers

SIP calculator · Lumpsum calculator · Step-up SIP calculator

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