investing
SIP vs Lumpsum: Which Is Better for You?
By Himanshu Kumar Gupta · · 5 min read
If you already have the money, a lumpsum usually ends with more, because all of it starts compounding on day one. A SIP wins on discipline and on protecting you from investing everything at a market high.
The same ₹6,00,000, two ways
Assume a 12% yearly return for 10 years:
| Approach | Invested | Value after 10 years |
|---|---|---|
| Lumpsum of ₹6,00,000 today | ₹6,00,000 | ₹18,63,509 |
| SIP of ₹5,000 a month | ₹6,00,000 | ₹11,50,193 |
The lumpsum ends ₹7.1 lakh ahead, but only if returns are smooth. In real markets, a lumpsum invested just before a fall can take years to recover, while a SIP buys more units when prices are low.
When a lumpsum makes sense
- You received a bonus, an inheritance or a maturity amount and will not need it for 7 years or more.
- You can stay calm if the value drops 20% to 30% soon after investing.
When a SIP makes sense
- You invest from your monthly salary, which is how most people build wealth.
- You worry about timing the market.
The middle path: STP
Park the lumpsum in a liquid or debt fund and move it into equity every month through a Systematic Transfer Plan over 6 to 12 months. You get most of the lumpsum's head start with less timing risk. See the STP calculator.
Try your own numbers
Put both options side by side in the compare calculator, or use the lumpsum and SIP calculators.
Frequently asked questions
- Is SIP better than lumpsum?
- Not always. With money in hand and a long horizon, a lumpsum often ends higher. A SIP is better for investing from income and for reducing timing risk.
- Can I do both SIP and lumpsum?
- Yes. Many investors run a monthly SIP and add lumpsums when they get a bonus, or move a lumpsum in gradually through an STP.