SIP vs Lumpsum
Deploy the same total rupees two different ways. Lumpsum at year zero, SIP spread across the horizon. Same expected return, same horizon, single-screen delta. Updated for FY26.
How to read the comparator
Both columns start with the same total amount. The lumpsum column drops the entire sum in at year zero and lets it compound for the full horizon. The SIP column splits the same total into equal monthly tranches, each compounded for whatever time remains. Because lumpsum gets the full compounding window for every rupee, it wins on raw math whenever returns are positive and constant.
The catch with that lumpsum win is that real markets aren't constant. Indian equity over the last 20 years has delivered a roughly 12% CAGR — but inside that, individual 5-year windows have ranged from -5% to over 25% per year. A lumpsum dropped in at the start of 2008 or early 2020 took 18-24 months to break even. SIPs through the same windows kept buying units at depressed prices and ended ahead of the lumpsum once recovery hit. The comparator can't model that path-dependence; it just shows the smooth-return outcome.
What this comparator does not include
Path dependence (the order of returns), STP strategies (parking a lumpsum in a debt fund and transferring it monthly into equity), the behavioural cost of watching a lumpsum drop 20% before recovering, fund expense ratios, exit loads on early redemption, and the FIFO-units complexity of partial redemptions across the SIP holdings. For a richer model of just one side, use the SIP calculator or the lumpsum calculator directly.
Tax treatment
Both sides face the same tax rate at redemption. For equity mutual funds (≥65% Indian equity), units held over one year qualify as LTCG, taxed at 12.5% on gains above ₹1.25 lakh per financial year post the 23-July-2024 budget rules. Short-term (≤1 year) is 20%. Debt mutual funds purchased after 1-April-2023 are slab-rate taxed on the whole gain under Section 50AA. Because the lumpsum corpus is bigger at any given year, its absolute tax liability is also bigger — but the percentage rate is the same.
Frequently Asked Questions
Which beats the other — SIP or lumpsum? +
If markets only go up, lumpsum wins because every rupee gets the full compounding window. If markets fluctuate, SIP wins through rupee-cost averaging — buying more units when prices are low. In Indian equity, which historically delivers 11-13% CAGR over 15+ years with plenty of mid-cycle volatility, the actual outcome is usually close, with SIP slightly behind in a flat-trending bull and slightly ahead in a U-shaped market. The bigger reason most people SIP is behavioural: it removes the timing decision.
Are the two calculators using the same return assumption? +
Yes. This comparator uses a single expected-return input that applies to both. In real life equity SIPs see slightly different effective returns from lumpsum because of when the money enters; we ignore that here so the math stays interpretable. For most planning purposes the simplification is harmless.
Why is the total invested the same on both sides? +
The comparator deploys the same total rupees on both sides — that's the point. Lumpsum invests the whole amount at year zero. SIP spreads it across the horizon in equal monthly tranches. The total invested matches; what differs is when each rupee starts compounding.
What if I have ₹10 lakh sitting in cash today? +
Most planners suggest a hybrid: invest 30-50% as lumpsum to capture immediate compounding, and spread the remaining 50-70% across 12-18 monthly tranches (a 'STP' from a debt fund) to reduce timing risk. Dumping all of it in one day is mathematically optimal in a steadily rising market and behaviourally painful if the market drops 15% next week. The calculator can't pick between these for you — your tolerance for short-term drawdown can.
Does the tax treatment differ? +
For equity mutual funds, tax is on gains at redemption regardless of how you bought in. LTCG (units held over a year) is 12.5% on gains above ₹1.25 lakh per FY post 23-Jul-2024. STCG is 20%. Because lumpsum corpus is bigger at any given year of the horizon, its absolute tax liability at exit is also larger — but on a percentage basis both face the same rate.