Lumpsum Investment
SIP Investment
Comparison Results
Growth Comparison Chart
Understanding Comparison Results
Future Value Comparison
The future value shows what your investment will grow to. Higher future value doesn't always mean better strategy - you must also consider total investment amount and risk factors.
Total Investment vs Returns
Lumpsum requires large upfront capital while SIP spreads investment over time. Compare the total invested amount to understand capital efficiency. SIP often requires higher total investment but offers better risk management.
Winner Determination
The 'winner' is determined by absolute returns, but the best choice depends on your situation. Lumpsum wins in rising markets, SIP wins in volatile markets. Consider your cash flow, risk tolerance, and market outlook.
Growth Chart Analysis
The dual-line chart shows how investments grow over time. Notice how lumpsum starts higher but SIP catches up in later years. Crossover points indicate when one strategy overtakes the other.
What is Lumpsum vs SIP Investment?
Real-World Comparison Scenarios
See how different investment strategies perform
Equal Total Investment Comparison
Comparing ₹6,00,000 total investment over 10 years at 12% return. Lumpsum invests ₹6,00,000 upfront while SIP invests ₹5,000 monthly (₹5,000 × 120 months = ₹6,00,000). This shows the power of early compounding.
Calculation Steps
- Lumpsum: ₹6,00,000 invested at start
- SIP: ₹5,000 per month for 120 months
- Both: 12% annual return, 10 years
- Total investment: ₹6,00,000 each
Small Monthly Investment - Long Term
A salaried professional invests ₹3,000 monthly through SIP for 20 years at 14% return, compared to a one-time ₹50,000 investment. This demonstrates how consistent small investments can outperform larger one-time investments over very long periods.
Calculation Steps
- Lumpsum: ₹50,000 invested at start
- SIP: ₹3,000 per month for 240 months
- Both: 14% annual return, 20 years
- Total SIP investment: ₹7,20,000
High Amount - Short Term
An investor with ₹10,00,000 idle capital compares lumpsum vs ₹15,000 monthly SIP for 5 years at 10% return. Short-term scenarios often favor lumpsum due to immediate full exposure to compound growth.
Calculation Steps
- Lumpsum: ₹10,00,000 invested at start
- SIP: ₹15,000 per month for 60 months
- Both: 10% annual return, 5 years
- Total SIP investment: ₹9,00,000
How to Use the Comparison Calculator
Enter Lumpsum Parameters
Input your one-time investment amount, expected annual return rate, and investment period. The calculator accepts amounts from ₹1,000 to ₹1,00,00,000 and periods from 1 to 50 years.
Enter SIP Parameters
Input your monthly SIP amount, expected annual return rate, and investment period. You can invest as little as ₹100 per month or up to ₹5,00,000 per month.
View Comparison Results
Instantly see side-by-side results showing future value, total investment, and profit for both methods. The comparison card highlights which strategy generates higher returns.
Analyze Growth Chart
Study the visual chart showing how both investments grow over time. The dual-line graph makes it easy to spot the crossover points and understand long-term trends.
Understanding the Parameters
Lumpsum Amount
The total amount you invest at once. This is your starting capital that will grow through compound interest. Larger lumpsum amounts benefit more from early compounding but require significant upfront capital.
SIP Monthly Amount
The fixed amount you invest every month. This should be comfortable for your monthly budget. Even small monthly investments can grow significantly over long periods through disciplined investing.
Investment Period
The duration you plan to stay invested. Longer periods amplify the benefits of compounding for both methods. Most wealth creation happens in the later years due to exponential growth.
Expected Return Rate
Your anticipated annual growth rate. Indian equity mutual funds historically average 12-15%. You can set different rates for lumpsum and SIP to model various scenarios.
Calculation Formulas
Mathematical foundations for both investment methods
Lumpsum Future Value
Standard compound interest formula. P is principal amount, r is annual return rate (as decimal), and t is time in years. This calculates what your one-time investment will grow to.
FV = P × (1 + r)^t
Example: FV = ₹1,00,000 × (1 + 0.12)^10 = ₹3,10,585
SIP Future Value
SIP compound interest formula. P is monthly payment, r is monthly return rate (annual rate / 12), and n is total months. This accounts for regular monthly investments.
FV = P × [((1 + r)^n - 1) / r] × (1 + r)
Example: FV = ₹5,000 × [((1 + 0.01)^120 - 1) / 0.01] × 1.01 = ₹1,16,170
Comparison Metrics
The absolute difference between both future values shows which method generates higher returns. Percentage difference helps understand the relative advantage.
Difference = |FV_Lumpsum - FV_SIP|
Example: Difference = |₹3,10,585 - ₹1,16,170| = ₹1,94,415
Frequently Asked Questions
Neither is universally better - it depends on your situation. Lumpsum works best when you have idle capital, market is at a low point, and you can tolerate short-term volatility. SIP works best for regular income earners, volatile markets, and those who want to avoid timing risk. Many investors use both: lumpsum for windfalls and SIP for regular savings.
If you have a large amount but are worried about market timing, consider a hybrid approach: invest 30-40% as lumpsum immediately and convert the rest into monthly SIPs over 12-18 months. This balances the benefits of early compounding with rupee cost averaging. Alternatively, invest lumpsum in debt funds and start an STP (Systematic Transfer Plan) to equity.
Yes, SIP reduces timing risk through rupee cost averaging. When markets fall, your fixed SIP amount buys more units, lowering your average cost. When markets rise, you buy fewer units but your existing units gain value. However, SIP doesn't eliminate market risk - your investment can still lose value in prolonged bear markets. SIP's main advantage is psychological comfort and disciplined investing.
Absolutely! This is often the smartest strategy. Use lumpsum for windfalls (bonuses, inheritance, maturity proceeds) and SIP for regular monthly savings from salary. This maximizes both early compounding (lumpsum) and disciplined investing (SIP). Many successful investors maintain ongoing SIPs while making opportunistic lumpsum investments during market corrections.
In consistently rising markets, lumpsum wins because your entire capital is exposed to growth from day one. SIP invests gradually, so later installments miss the early growth. However, markets rarely rise consistently - they're volatile. SIP's advantage appears in volatile markets where it averages out the ups and downs. Historical data shows SIP performs better in most real-world scenarios.
Tax treatment is identical for both methods - it depends on the fund type and holding period, not the investment method. Equity funds held >1 year qualify for long-term capital gains (LTCG) tax at 10% above ₹1 lakh. For SIP, each installment has its own purchase date, so LTCG period is calculated separately for each installment. This can be advantageous for tax harvesting.