SIP vs Lumpsum Calculator
Take one pot of money and invest it two ways — all at once as a lump sum, or dripped in monthly as a SIP over the same years — to see which grows more.
📘 Prefer the full write-up? Read our guide: SIP vs Lumpsum: Which Actually Makes You More Money?.
SIP vs lumpsum: the same money, two ways in
Suppose you have a fixed pot of money earmarked for investing — a bonus, a maturity payout, or simply savings you have set aside. You have two honest choices. Put it all to work today as a lump sum, or feed it in month by month as a SIP until the whole amount is invested. This tool holds the total and the time horizon constant and shows exactly how each path ends up, so you are comparing like with like rather than a big lump sum against a small monthly cheque.
How this comparison works
Both strategies invest the identical total over the identical number of years at the same assumed return. The only thing that changes is when the money enters the market.
- Lumpsum — the full amount compounds from day one:
FV = P × (1 + r/100)^years. - SIP — the total is split into equal monthly instalments (
P ÷ (years × 12)), each invested at the start of its month:FV = m × (((1 + i)^n − 1) ÷ i) × (1 + i), whereiis the monthly return andnthe number of months.
Worked example: ₹12 lakh, 10 years, 12%
The table traces where the difference comes from. A lump sum has its entire ₹12 lakh compounding for the full decade. A SIP only has its final instalment invested for a single month, so on average the SIP money is in the market for roughly half the period.
| Strategy | How it is invested | Total invested | Final value @ 12% |
|---|---|---|---|
| Lumpsum | ₹12,00,000 once, today | ₹12,00,000 | ₹37,27,018 |
| SIP | ₹10,000 every month for 120 months | ₹12,00,000 | ₹23,23,391 |
| Advantage | Extra time in the market for the lump sum | — | ₹14,03,627 |
Notice that both columns invest exactly ₹12,00,000 of your own money — the entire ₹14 lakh gap is returns the lump sum earned simply by starting earlier. The first SIP instalment does compound for the full ten years, but the last one is invested for a single month, so on average each SIP rupee works for only about half the horizon. That "half the time in the market" is the whole story of the difference, and it is why the gap grows with both the return rate and the tenure.
Why the maths always crowns lumpsum
In this constant-return model the lump sum wins every single time the return is positive — the only question is by how much. That is not a quirk of these numbers; it is baked into the assumption. If money reliably grows at, say, 1% a month, then the earlier a rupee is invested the longer it compounds, so front-loading the whole amount must beat drip-feeding it. Raise the return or lengthen the horizon and the gap widens further, because compounding rewards time above almost everything else. Try it on the lumpsum calculator and the SIP calculator and you will see the same ranking hold.
So if the maths is this one-sided, why does almost every adviser in India recommend SIPs? Because the assumption of a smooth, guaranteed monthly return is exactly the thing real markets do not offer.
Why real investors often still choose SIP
Two forces the model ignores frequently swing the real-world outcome back towards the SIP.
- Volatility and timing. Markets do not rise in a straight line. If you invest a lump sum just before a crash, you sit on losses for years; a SIP keeps buying through the fall, picking up more units cheaply (rupee-cost averaging). When markets are choppy or expensive, a SIP has often beaten a same-total lump sum historically.
- You rarely have the lump sum anyway. Most people earn monthly, not in windfalls. A SIP matches investing to income, builds the discipline of paying yourself first, and removes the paralysis of trying to pick the perfect day to deploy a large sum.
| Factor | Lumpsum | SIP |
|---|---|---|
| In a steady-return model | Always wins | Always trails |
| If markets crash soon after | Hit hardest | Cushioned — keeps buying cheap |
| Suits your cash flow | Needs a large sum ready | Matches a monthly salary |
| Timing risk | High — one entry point | Low — spread across months |
| Behavioural ease | Nerve-testing to deploy at once | Automatic and low-stress |
So which should you pick?
The honest answer depends on which situation you are actually in, not on the number this tool prints.
- You already hold a large sum and your horizon is long (5 years-plus): investing it as a lump sum has the odds on its side, especially when markets are not obviously overheated.
- You are nervous about timing a big amount: a middle path — a Systematic Transfer Plan — parks the money in a liquid fund and moves a fixed slice into equity each month, capturing most of the lump sum's edge while spreading the entry.
- You earn month to month: a SIP is the natural, disciplined choice, and stepping the amount up as your income grows compounds the habit — model that on the step-up SIP calculator.
One more honest caveat: the figures here are gross and nominal. Whatever corpus either path builds will buy less in future than it does today, and a slice of the gains goes to capital gains tax on redemption. Neither of those changes the ranking — lumpsum still leads in the model — but both shrink the real prize, so treat the headline number as an optimistic ceiling rather than a forecast. The sensible takeaway is less "which strategy is mathematically superior" and more "which one you will actually stick with for a decade without panicking or procrastinating," because a plan you abandon halfway beats neither.