SIP vs lump sum
Same fund, same money, very different experience. What each does to your risk, and which one suits which situation.
| SIP | Lump sum | |
|---|---|---|
| How it works | A fixed amount invested every month | Everything invested on one day |
| Price paid | Averages out — some units bought high, some low | One price, on one day |
| Timing risk | Spread over months | Concentrated on the day you invest |
| Cash needed | A monthly commitment | The full amount upfront |
| Suits | Salary income, building a habit | A bonus, maturity or inheritance |
| Risk of stopping | SIPs get paused when money is tight | None — the money is already in |
The arithmetic, with assumptions stated
₹10,000 a month for 10 years at a constant 12% a year grows to about ₹23.2 lakh, on ₹12 lakh invested. A single ₹1 lakh invested at the same 12% for 10 years becomes about ₹3.1 lakh.
Those are arithmetic results, not forecasts. No fund returns 12% every year, and the order of returns matters: a lump sum invested just before a 30% fall takes years to recover, while a SIP keeps buying through it.
What actually decides it
- Do you have the money now, or does it arrive monthly? Most people do not have a lump sum to invest — the question answers itself.
- How long until you need it? Under three years, neither structure fixes the real risk, which is equity itself.
- Would you panic and redeem? A lump sum that falls 25% in month two tests that harder than a SIP.
- Lump sum in a falling market is the case for staggering — spreading the entry over 6–12 months, which is a SIP with a fixed number of instalments.
Run the numbers on your own figures in the savings calculator — it shows the monthly-investing and one-time routes side by side, including the value in today's money.