₹10,000 a month for 15 years at 12%
SIP value about ₹50.46 lakh on ₹18 lakh invested. The same ₹18 lakh as a lump sum: about ₹1.08 crore. A lump sum equal to the SIP: about ₹8.4 lakh.
SIP vs lump sum calculator
Monthly compounding at the same rate for both. The SIP deposits at the start of each month. The lump sum is the total of all those SIP instalments, put in on day one. Real returns vary, and a lump sum is exposed to the market on one date.
10 thousand
%
A lump sum of the same total ends higher by
₹57,46,684
You invest ₹18,00,000 either way. The catch: a lump sum needs all of it on day one. The SIP is the same as a single ₹8,41,549 invested today.
- SIP value
- ₹50,45,760
- Lump sum value
- ₹1,07,92,444
- Lump sum that equals the SIP
- ₹8,41,549
0715
SIP or lump sum: what the maths shows
People ask which is better as if it were a race, but they answer different questions. A lump sum is for when you have a large amount today. A SIP is for when your money comes in monthly, which is the case for most of us.
Put ₹10,000 a month into a fund for 15 years at an assumed 12% and you invest ₹18 lakh and reach about ₹50.5 lakh. If someone had ₹18 lakh on day one and invested it for the same 15 years at the same rate, they would end near ₹1.08 crore. The lump sum is higher because every rupee had 15 years, not an average of about 7.5.
That does not mean the SIP lost. The fair comparison is the lump sum that equals the SIP. The SIP's final value of ₹50.5 lakh is the same as a one-time ₹8.4 lakh invested today. So the SIP effectively behaves like a smaller lump sum.
The practical rule: if you have a windfall, a lump sum can be fine, but if markets look high, many investors stagger it over 6 to 12 months. If you earn monthly, a SIP matches your cash flow and builds the habit.
Sources
What this calculator does not account for
- Market risk.
- Exit loads and tax on gains.
- A different return in different years.
How this is calculated
Formula: Future value of each route
SIP FV =P × ((1 + j)ⁿ − 1) ÷ j × (1 + j); lump sum FV =total × (1 + j)ⁿWhat the symbols mean
- PMonthly SIP amount.
- jMonthly return, the yearly return ÷ 12.
- nNumber of months.
Good to know
- Equal today's lump sum to the SIP: SIP FV ÷ (1 + j)ⁿ.
- See each method alone in the SIP and lump sum calculators.
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Worked examples
Each example is worked out by the same code as the calculator above.
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<iframe src="/embed/sip-vs-lumpsum-calculator" title="SIP vs lump sum" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
Why does the lump sum end higher?
All the money starts working on day one, while a SIP spreads it over the years. In a rising market that gives the lump sum more time.
So should I always use a lump sum?
Only if you have the full amount at once. Most people do not, so a SIP is how they invest. A SIP also spreads the entry price, which helps in a volatile market.
What is the equal lump sum shown?
The one-time amount that, put in today, would grow to the same value as your SIP. It shows how much a SIP's instalments really add up to in today's money.
Are returns guaranteed?
No. Mutual fund returns are not assured. The tool uses a steady yearly rate to compare methods.