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Home›India›SIP vs Lumpsum Calculator

SIP vs Lumpsum Calculator India — FY 2025-26

Compare SIP and lumpsum investment returns side by side with the same total amount. Simulate how SIP protects during market crashes via rupee cost averaging. Get a personalised recommendation based on your income type, market PE valuation, and risk tolerance. Updated for FY 2025-26 LTCG (12.5%) and STCG (20%) rates.

Compare SIP and lumpsum with the same total investment over the same period
\u20B9
Amount invested monthly via SIP (e.g. \u20B910,000)
months
Number of months of SIP (e.g. 120 = 10 years)
% p.a.
Equity MF expected CAGR (~12% for large-cap, ~15% for mid-cap)
years
Years the SIP corpus stays invested after SIP ends (0 if you withdraw immediately)
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How to Use This Calculator

Side by Side tab

Enter your monthly SIP amount and SIP duration in months. The calculator treats the total SIP investment (monthly × months) as the lumpsum amount for a fair comparison. Both invest the same total rupees, only the timing differs. Optionally set a post-SIP growth period to see how the SIP corpus compounds after you stop contributing. The lumpsum is assumed invested on day 1 for the entire period (SIP months + post-SIP years).

Market Crash Scenario tab

Enter your total investment amount, a crash percentage (e.g. 30% for a 2008-style correction), and a recovery period in years. The calculator simulates the crash in year 1 with linear decline, then linear recovery, then normal equity growth. SIP buys units at lower NAVs during the crash, demonstrating rupee cost averaging — the primary behavioural argument for SIP over lumpsum.

Decision Framework tab

Answer 4 questions: source of funds (salary, bonus, inheritance, savings), current market PE (check NIFTY 50 PE on moneycontrol.com), risk tolerance, and amount. The calculator scores each factor and recommends SIP, Lumpsum, or STP (Systematic Transfer Plan) based on your specific situation.

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The Formulas

SIP and lumpsum use different compounding mechanics because money enters the market at different times:

Lumpsum Future Value:
FV = PV × (1 + r)n
Where PV = principal, r = annual return / 12 / 100, n = total months

SIP Future Value (annuity due):
FV = P × [((1 + r)n − 1) / r] × (1 + r)
Where P = monthly SIP, r = annual return / 12 / 100, n = total SIP months

Post-SIP growth (if applicable):
Final = SIP FV × (1 + r)post-SIP months

CAGR (Compound Annual Growth Rate):
CAGR = (Final Value / Total Investment)1/years − 1

Rupee Cost Averaging (crash scenario):
Average NAV = Total Investment / Total Units Purchased
SIP buys more units at lower NAV → lower average cost → higher returns when market recovers

Tax (FY 2025-26, Finance Act 2024):
Equity LTCG (> 12 months): 12.5% on gains above &rupee;1,25,000/year
Equity STCG (< 12 months): 20%
SIP: each instalment has its own 12-month clock (FIFO on redemption)

Example

Anika — IT professional in Pune, &rupee;10,000 monthly SIP vs &rupee;12L lumpsum

Anika (30) wants to invest &rupee;12 lakh in a NIFTY 50 index fund. She earns a monthly salary and can set aside &rupee;10,000/month for 10 years (= &rupee;12L total). Alternatively, she could invest her saved &rupee;12L lumpsum on day 1. Assuming 12% p.a. return:

Step 1: SIP Result

SIP monthly amount&rupee;10,000
SIP duration120 months (10 years)
Total invested&rupee;12,00,000
SIP corpus at 12% CAGR&rupee;23,23,391
Wealth gain (SIP)&rupee;11,23,391 (1.94x)

Step 2: Lumpsum Result

Lumpsum invested day 1&rupee;12,00,000
Value after 10 years at 12%&rupee;37,27,021
Wealth gain (Lumpsum)&rupee;25,27,021 (3.11x)

Step 3: Comparison

Lumpsum advantage&rupee;14,03,630
Why lumpsum wins hereFull &rupee;12L compounds for 10 years vs SIP averaging

But here's the catch: Anika doesn't have &rupee;12L sitting idle — she earns it monthly from salary. SIP is the only practical option for her. The comparison is meaningful only when you already have the full amount available (e.g., inheritance, bonus, or accumulated savings). For salaried investors, SIP is not just a strategy — it's the only feasible approach.

Historical NIFTY 50: When Does SIP Beat Lumpsum?

Analysis of NIFTY 50 rolling returns (2000–2025):

Lumpsum wins (10-year rolling)~65% of periods
SIP wins (10-year rolling)~35% of periods
SIP wins best whenEntry at 2008 peak, 2000 peak
Lumpsum wins best whenEntry at 2003 bottom, 2009 bottom, 2020 bottom

The takeaway: lumpsum is statistically superior, but SIP provides a better risk-adjusted return for most retail investors because it eliminates the behavioural risk of panic-selling during crashes. Discipline matters more than optimality.

STP: The Middle Ground Between SIP and Lumpsum

If you have a large lumpsum but are nervous about market timing, Systematic Transfer Plan (STP) is the pragmatic middle ground:

  • Park the lumpsum in a liquid fund (earning ~6.5% p.a.)
  • Set up automatic monthly transfers to an equity fund over 6–12 months
  • Your money earns more than a savings account (6.5% vs 3.5%) while waiting to be deployed
  • Tax note: Post-April 2023, each STP redemption from the liquid fund triggers slab-rate tax on gains (no indexation benefit). For a 30% slab investor, the tax drag is typically 0.1–0.15% of the lumpsum — small relative to the risk reduction.

Use our STP Calculator to model the exact returns and tax impact for your amount.

FAQ

SIP reduces timing risk — the risk of investing your entire amount just before a market crash. By spreading investments over months or years, SIP averages your purchase NAV, reducing the impact of short-term volatility. However, SIP does not reduce market risk itself — if the entire market declines over your investment period, both SIP and lumpsum will lose value. SIP is psychologically safer because it eliminates the "what if I invested at the top?" regret. For time horizons above 10 years, the entry point matters less and lumpsum's compounding advantage becomes dominant. Think of SIP as a risk-management tool (like insurance), not a return-maximisation strategy.
Each SIP instalment is treated as a separate purchase for tax purposes. This means: your January 2025 SIP has a 12-month LTCG clock starting January 2025; your February 2025 SIP starts in February 2025; and so on. When you redeem, units are sold on a FIFO (First In, First Out) basis. If you started a SIP 18 months ago and redeem all units: the first 6 months of instalments qualify for LTCG at 12.5% (held > 12 months), while the last 6 months are STCG at 20% (held < 12 months). This staggered holding is a unique SIP characteristic that lumpsum does not have — with lumpsum, all units have the same holding period.
CAGR (Compound Annual Growth Rate) measures the return assuming a single investment on day 1. It works perfectly for lumpsum but understates SIP returns because SIP invests over time. XIRR (Extended Internal Rate of Return) correctly accounts for multiple cash flows at different dates — it considers that your first SIP instalment was invested for 10 years, but your last instalment was invested for just 1 month. XIRR gives the true annualised return for a SIP. Example: a 10-year SIP with 12% fund CAGR might show ~12% XIRR, but the simple CAGR from total-invested to final-value will be lower (~7-8%) because much of the money was invested for less than 10 years. Always use XIRR to evaluate SIP performance, and CAGR for lumpsum.
No. This is one of the most common mistakes investors make. Markets hit all-time highs frequently in long-term uptrends — the NIFTY 50 has crossed hundreds of all-time highs since 2000. Stopping SIP at highs means you miss the continued upside. Data shows: if you had stopped SIP every time NIFTY hit an ATH and restarted after a 10% correction, your returns would be significantly worse than simply continuing the SIP without interruption. The entire point of SIP is to remove the need for market timing. Continue your SIP in all market conditions — it is a discipline-based strategy, not a timing-based one. The only time to stop SIP is when you reach your financial goal.
Yes, absolutely. Many experienced investors use a core + satellite approach: run a regular monthly SIP as the core (disciplined, long-term wealth building), and make additional lumpsum investments when market valuations are attractive (NIFTY PE below 18-20) or when they receive windfalls like bonuses. Both SIP and lumpsum purchases in the same fund folio add to your unit balance. On redemption, all units are treated FIFO regardless of whether they came from SIP or lumpsum. The blended approach captures the discipline of SIP and the compounding advantage of timely lumpsum additions.

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