# SIP vs Lump Sum: Which Is Better, with Real Numbers > SIP vs lumpsum with real numbers: why lump sums win on paper, when SIPs win in practice, and what to do when you already have a large amount to invest. Source: https://trykosh.com/learn/sip-vs-lumpsum Guide - Investing # SIP vs lump sum: which is better? Most SIP vs lump sum comparisons answer the wrong question. There are really two decisions, and the right answer differs for each. Here's the maths, then the judgement. Updated 25 October 20266 min readBy the Kosh team On this page[Two different questions](#two-questions)[The straight-line maths](#maths)[What happens when markets move](#volatility)[If you already have a lump sum](#have-a-lump-sum)[Edge cases worth knowing](#edge-cases)[The bottom line](#bottom-line)[FAQs](#faq) ## Two different questions People ask "SIP or lump sum?" in two quite different situations: 1. **Investing from income.** You earn a salary and can invest some of it every month. Here there's no real choice: you don't have the lump sum yet. A SIP is simply how investing from income works. 2. **Investing money you already have.** A bonus, an inheritance, a matured FD, the sale of a property. Here the choice is real: put it all in today, or spread it over months. Most online comparisons mix the two up, which is why their conclusions seem to contradict each other. We'll take them one at a time. ## The straight-line maths Assume investments grow steadily at 12% a year, compounded monthly. Compare INR 10,000 a month for 10 years with the same INR 12 lakh invested on day one, using the [SIP vs lumpsum calculator](/tools/sip-vs-lumpsum-calculator): INR 12 lakh over 10 years at an assumed 12% a year Invested Value after 10 years SIP of INR 10,000 a month INR 12,00,000 INR 23,23,391 Lump sum of INR 12,00,000 on day one INR 12,00,000 INR 39,60,464 Lump sum of INR 7,03,975 on day one INR 7,03,975 INR 23,23,391 The lump sum ends INR 16.37 lakh ahead, but only because most of its money was invested for longer. The SIP's last instalment was invested for a single month. The third row is the fair comparison for question 1: a SIP of INR 10,000 a month is worth the same as having INR 7.04 lakh today. Since a salaried investor doesn't have INR 12 lakh today, the lump-sum row isn't an option they were ever choosing between. **What the maths assumes** In a steadily rising line, investing earlier always wins. Real markets don't move in a straight line, and that's the only reason the question is interesting. The returns here are assumptions, not predictions. ## What happens when markets move Here's a simple illustration. You invest INR 50,000, either all at once or as INR 10,000 a month for five months, in a fund whose NAV moves as shown: INR 50,000 in a fund over five months NAV path SIP units SIP value at end Lump sum value at end Falls and recovers: 100, 80, 60, 80, 100 616.67 INR 61,667 INR 50,000 Rises steadily: 100, 110, 120, 130, 140 422.59 INR 59,163 INR 70,000 When the market dips and recovers, the SIP buys more units at low prices (its average cost is INR 81.08 against the lump sum's INR 100), and ends ahead. When the market rises steadily, the lump sum wins because it bought everything at the lowest price. This is **rupee cost averaging**: a SIP doesn't beat the market, it reduces the damage of bad timing. Over long periods markets have risen more often than they've fallen, which is why a lump sum tends to win on average, and why it sometimes loses badly. ## If you already have a lump sum This is question 2, and the honest answer is a trade-off between expected return and regret. A middle path is a **systematic transfer plan (STP)**: park the money in a liquid or debt fund and move a fixed amount into equity each month. Say you have INR 10 lakh. Using the [STP calculator](/tools/stp-calculator) with an assumed 7% on the parked money and 12% on equity, moving it over 12 months gives about **INR 32,25,138** after 10 years. Investing it all on day one gives **INR 33,00,387**. On a straight line, spreading it costs about INR 75,000 over ten years. That's the price of protection against putting everything in the week before a fall. Matching the method to the situation Situation A sensible approach Investing from monthly salary SIP, raised each year with your income Lump sum, long horizon, calm about volatility Invest most of it at once Lump sum, would panic at a 20% fall soon after Spread over 6 to 12 months via an STP Lump sum needed within 3 to 5 years Keep it out of equity: FDs or debt funds Large lump sum relative to your wealth Spread it; one bad entry point matters more ## Edge cases worth knowing - **Tax is per instalment.** Each SIP instalment has its own holding period. Equity gains held over 12 months are long-term, taxed at 12.5% above INR 1.25 lakh a year; under 12 months, at 20%. Redeem early and your newest instalments are taxed as short-term. See [capital gains tax on mutual funds](/learn/capital-gains-tax-on-shares-and-mutual-funds). - **ELSS lock-in is per instalment too.** Each SIP instalment in a tax-saving fund is locked for three years from its own date, so the last one unlocks three years after you stop. - **Exit loads.** Many equity funds charge an exit load on units redeemed within a year, which matters if you're spreading money in and might need it out. - **Stopping is the real risk.** A SIP that's paused during every market fall loses the averaging benefit exactly when it would help. The [SIP delay cost calculator](/tools/sip-delay-cost-calculator) shows what a gap costs. - **Short horizons and debt funds:** for money in FDs or debt funds, prices move far less, so the SIP vs lump sum question barely matters. Invest when you have the money. - **The SIP date hardly matters.** Over long periods, the difference between a SIP on the 1st and one on the 15th is tiny. Pick the day after salary arrives so the money never sits idle or gets spent. - **Step-ups matter more than the method.** Raising a SIP by 10% a year usually adds more than any lump-sum timing decision. Try the [step-up SIP calculator](/tools/step-up-sip-calculator). ## The bottom line If you're investing from salary, the question is how much and for how long, not SIP or lump sum. Start a SIP and raise it every year. If you have a lump sum and a long horizon, investing most of it early has the higher expected return, and an STP over 6 to 12 months is a reasonable insurance policy if a fall right after investing would make you sell. Neither choice matters as much as staying invested. [Free tool**SIP vs lumpsum calculator**Compare spreading money through a SIP with investing the same total at once. Both are grown at the same assumed return so the difference is purely about timing.](/tools/sip-vs-lumpsum-calculator)[Free tool**SIP calculator**See what a monthly SIP could grow to. Enter how much you invest each month, an assumed yearly return and how long you'll stay invested.](/tools/sip-calculator)[Free tool**Lumpsum calculator**Work out what a one-time investment could grow to. Enter the amount, an assumed yearly return and how long you'll hold it.](/tools/lumpsum-calculator)[Free tool**STP calculator**Spread a lump sum into equity over several months instead of all at once. Enter the amount, the transfer period and an assumed return for each fund.](/tools/stp-calculator)[Free tool**Step-up SIP calculator**Raise your SIP a little every year and watch the gap with a flat SIP grow. Enter a starting amount, the yearly increase, an assumed return and the period.](/tools/step-up-sip-calculator)[Free tool**SIP goal calculator**Work backwards from a goal to the monthly SIP that gets you there. Inflate the goal to future prices and count what you've already saved.](/tools/sip-goal-calculator) **Where Kosh fits** Kosh is an educational planning tool, not a SEBI-registered adviser. It reads your CAS and bank statements, shows what you already invest, and turns goals into monthly SIP amounts. It explains fund categories but never recommends specific funds. ## Frequently asked questions Is SIP better than lump sum? Not on paper: if markets rise over time, money invested earlier usually ends with more. But a SIP is how most people invest from monthly income, and it reduces the risk of investing everything at a market peak. The right choice depends on whether you already have the money. Should I invest a lump sum all at once or through SIP? If your horizon is long and you can stay calm through a fall, investing most of it at once has the higher expected return. If a sharp fall soon after would make you sell, spreading it over 6 to 12 months through a systematic transfer plan is a reasonable middle path. What is rupee cost averaging? Investing a fixed amount at regular intervals buys more units when prices are low and fewer when they're high. It lowers your average cost in volatile markets, but it doesn't guarantee a profit or beat a lump sum in a steadily rising market. What is an STP? A systematic transfer plan moves a fixed amount from one fund, usually a liquid or debt fund, into another, usually an equity fund, at regular intervals. It's a way to spread a lump sum into equity over several months. How is a SIP taxed when I redeem? Each instalment is treated as a separate purchase with its own date. For equity funds, units held over 12 months are long-term and taxed at 12.5% above INR 1.25 lakh of gains a year; units held for less are short-term and taxed at 20%. ## Sources - [SEBI investor education](https://investor.sebi.gov.in/) Written by the Kosh team and checked against the rules in force on 25 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-sip-vs-lumpsum)