Is a lumpsum better than a SIP?

This calculator does not answer that, and a calculator cannot. Under one constant assumed return the lump sum is always ahead, simply because its money is invested for longer — that result is built into the arithmetic before any market behaviour is considered. The genuine question is how returns arrive during your window, which no constant-rate projection contains.

Why is the monthly route given a different rate?

Because the two engines compound differently. The lumpsum engine compounds annually, so 12% means 12%. The SIP engine divides its rate by 12 and compounds monthly, so 12% means 12.6825% a year. Passing both the same number would give the monthly route a silent advantage, so this calculator converts the rate and displays the converted figure.

What does rupee cost averaging actually do?

It spreads your entry price across several dates, so no single date determines your cost. That reduces the consequence of investing immediately before a fall, and equally gives up some of the gain from investing immediately before a rise. Its value depends on the path prices take, which this calculator holds flat by design.

What if I park the money in a liquid fund while it waits?

Then this calculator understates the instalment route, because it treats waiting money as earning nothing. The STP calculator models exactly that case, with its own return on the source balance — it is the closer match to how staggering is usually done in practice.

Why do the two routes end identically at 0% return?

Because with nothing earned, when you invest cannot matter — both routes end at the amount you put in. That the figures converge at 0% is a useful check that the gap you see at other rates comes purely from time invested rather than from any asymmetry in the calculation.

Over how many months should I spread the instalments?

That is your decision, and the window scenarios show the numerical consequence of each choice: the longer the spread, the more of the period your money spends uninvested, and the wider the gap under a constant return. What the model cannot price is the protection a longer spread buys against a poorly timed entry.

Investment · FINANCIAL TOOLS

SIP vs Lumpsum Calculator

Compare investing an amount all at once against spreading it over monthly instalments, on equal terms.

Understand the calculation

Calculation logic, formula, example and guardrails behind the estimate.

How it works

The calculator projects the same total amount two ways. The lump sum route invests everything on day one and compounds for the whole period. The instalment route divides the amount into equal monthly payments, and whatever those instalments have built keeps compounding for the rest of the period.

Both routes are held to the same effective annual return. That sounds obvious but it is the part most comparisons get wrong: the underlying SIP and lumpsum engines use different compounding conventions, so giving both the same nominal percentage would hand the monthly route a 0.68 percentage point advantage that has nothing to do with strategy. The equalised nominal rate is shown as an output so you can see the adjustment being made.

More detail

Money not yet invested is treated as earning nothing. If you would in practice park it in a liquid fund while it waits, the STP calculator models that case, which is the more realistic version of staggering.

The result under a constant return will always favour the lump sum, for a reason that has nothing to do with markets: a rupee invested earlier earns for longer. The scenarios are there to show how the size of that gap responds to the window, the rate and the horizon.

If the money would earn something in a liquid fund while it waits, the STP calculator models that.

For a plain monthly investment out of income rather than a lump sum, use the SIP calculator.

Formula

Lump: A(1 + r)^n · Instalments: SIP(A ÷ m, iₑ, m months) compounded for the remainder

No formula is defined here. Both sides call the same engines as the standalone calculators; iₑ is the nominal monthly rate equivalent to the effective annual rate r, namely 12 × ((1 + r)^(1/12) − 1).

A: The total amount, identical on both routes.
r: Effective annual return — what one year actually earns.
n: Investment period in years.
m: Number of monthly instalments.
iₑ: The nominal annual rate that compounds monthly to exactly r, so neither route is favoured by convention.

Worked example

₹12,00,000 invested over 10 years at an assumed 12% effective annual return, either at once or across 12 monthly instalments of ₹1,00,000.

01Lump sum₹12,00,000 × 1.12¹⁰ = ₹37,27,018
02Equalised nominal rate for the monthly route12 × (1.12^(1/12) − 1) = 11.3866%
03Why not simply 12%12% nominal monthly earns 12.6825% a year — an unfair edge
04Instalments over 12 months, then 9 more years of growthProjected below the lump sum

The lump sum ends ahead because its money was invested for longer at the same rate. Change the assumed return to 0% and the two routes land on exactly the same figure, which confirms the gap is entirely a function of time invested rather than of anything about either strategy.

Important considerations

01
The comparison is fair only because the rates were equalised
The SIP engine compounds monthly and the lumpsum engine annually. At the same nominal number the monthly route earns 12.6825% against 12.000% — a 0.68 percentage point head start worth thousands of rupees over a decade, produced by nothing but convention. This calculator converts the rate so both earn identically, and shows the converted figure so the adjustment is visible.
02
A flat return can only favour investing sooner
If every period earns the same, then time invested is the only variable left, and the lump sum has more of it. Reading that as evidence for lump-sum investing mistakes an arithmetic identity for a finding about markets.
03
What staggering actually buys you
Instalments reduce the impact of the entry point: if prices fall partway through, later instalments buy more units. That benefit lives entirely in the variability of returns, which is exactly what this model holds constant. Treat the gap here as the cost of that insurance under calm conditions, not as its verdict.
04
Idle money is a real cost of waiting
This calculator assumes uninvested money earns nothing, which understates the instalment route for anyone who would park it in a liquid fund meanwhile. The STP calculator models that properly, with a separate return on the waiting balance.

Limitations

A single constant return removes the only condition under which staggering helps. Instalments exist to reduce the consequence of investing just before a fall, and a flat rate has no falls in it. This calculator therefore cannot tell you whether staggering was wise — only what each route produces if returns arrive evenly.
Money awaiting investment is assumed idle. In practice it would usually sit in a liquid fund, which the STP calculator models.
Nothing here is net of capital gains tax or exit loads, and neither route's tax treatment is modelled.

Frequently asked questions

Common questions about the sip vs lumpsum calculator and the assumptions behind it.

Next useful checks

Move from this result to the next decision without hunting through the full calculator list.

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Disclaimer

This calculator is provided for general information and planning only. It is not investment, tax or legal advice, and it does not take your personal circumstances into account. Outputs are estimates based on the assumptions stated on this page, exclude taxes and charges unless said otherwise, and market-linked returns are not guaranteed — the value of investments can fall as well as rise. Lending terms, rates and eligibility are decided by the lender. For advice on your own situation, speak to a qualified professional, several of whom you can consult on Finvestalk.