SIP vs Lumpsum, settled with actual Nifty data
Same total amount. Two strategies — drop it in on day 1, or spread it monthly. We replay both across 24 rolling start windows from 2005 to 2025 and tell you exactly how often lumpsum beat SIP, by how much, and in which market regimes.
Compare strategies
Same total, deployed two ways. Toggle backtest mode to replay against historical Nifty windows instead of a flat assumed return.
Drop the entire amount in on day 1.
Spread monthly across the duration.
Maturity progression
The maths behind both strategies
Lumpsum (compound annual)
SIP (future value of annuity)
Backtest mode
For lumpsum we accumulate the principal forward through actual monthly returns: balance ×= (1 + r_month) each month. For SIP we add the monthly contribution to the balance at the start of each month, then apply that month's return. We run this across 24 different start months (rolling, every quarter from Jan-2005 through Dec-2020) and report:
- Win-rate: % of windows where lumpsum maturity > SIP maturity.
- Median advantage: median of (lumpsum / SIP − 1) across windows.
- Worst-case: the window where SIP outperformed lumpsum the most (typically Jan-2008 starts — global financial crisis).
Why this isn't perfect: our monthly Nifty returns are approximated from publicly known annual returns distributed uniformly across 12 months. Real Nifty has intra-year volatility (March 2020 single-month: −23%) which would amplify SIP's benefit in crash starts and lumpsum's benefit in V-shaped recoveries. Use this for direction, not precision.
How the same maturity is taxed differently
Both strategies invest in equity mutual funds (or direct equity). LTCG above ₹1L is taxed at 10% under Section 112A; STCG (held ≤12 months) at 15% under Section 111A. The difference between SIP and lumpsum tax treatment is subtle but real:
Lumpsum — single lot
One purchase, one holding-period clock. After 12 months, every rupee is LTCG-eligible. Clean.
SIP — many tiny lots
Each monthly contribution starts its own 12-month clock. If you exit the entire SIP at month 60, the last 12 contributions (month 49–60) haven't completed 12 months — they're STCG @ 15%. Plan exits 12+ months after the last SIP installment to make 100% of gains LTCG-eligible.
The ₹1L exemption — re-balance trick
Both strategies should "harvest the exemption" annually: sell units worth ₹1L of LTCG and re-buy. Locks in tax-free gain, steps up cost basis. Our tax-loss harvesting calculator automates the inverse (offsetting losers).
When SIP actually beats lumpsum (and vice versa)
Lumpsum wins when:
- You have the cash now and the market is in a normal regime (PE 18-24).
- Investment horizon ≥ 5 years (gives compounding room).
- You won't psychologically break and sell on the first 20% drawdown.
SIP wins when:
- You're at a cyclic top — Nifty PE > 28, or the market just hit ATH after 3-year run. Backtest shows SIP beats lumpsum in roughly 40% of windows starting at ATH.
- You don't have lumpsum — you earn monthly. SIP is the only option; the comparison is moot.
- You're behaviorally fragile. SIP's smaller drawdowns prevent panic-selling.
The hybrid: STP
Park lumpsum in a liquid fund, transfer (STP) monthly into equity. Captures most of lumpsum's compounding while still smoothing entry. Backtests show STP underperforms pure lumpsum over >10y horizons but cuts maximum drawdown by ~30%.
Insider tip: if you're unsure, do 50/50: half lumpsum on day 1, half via 12-month STP. You give up ~5% expected return for halving regret risk. CAs frequently recommend this for HNI windfalls (bonus, ESOP grant, inheritance).
Common questions about SIP vs Lumpsum
Mathematically, does lumpsum always beat SIP?
In a strictly rising market with positive average returns, yes — putting money in earlier captures more compounding. Backtests show lumpsum wins ~67% of historical Nifty windows. The 33% where SIP wins are bear-start windows (e.g., Jan 2008).
Then why does everyone recommend SIP?
Most retail investors don't have lumpsum sitting idle — they earn monthly. SIP isn't competing with lumpsum in practice; it's competing with 'leave it in savings'. Behaviorally, SIP wins by getting people invested at all.
What returns did you use for backtest?
Approximated monthly Nifty 50 total returns 2005-2025, derived from public annual returns distributed uniformly across 12 months. Adequate for direction; real intra-year volatility means rolling-window outcomes can vary ±2-3%.
Can I run my own custom return assumption?
Yes — toggle off backtest mode and enter your own annual return. Standard SIP/lumpsum FV formulas apply.
What about SIP step-up?
This calculator uses flat SIP. For step-up SIP, see our goal-based investment calculator.
What about taxation?
Both go into equity MF — LTCG @ 10% above ₹1L if held >12 months. SIP creates many lots; plan exits 12+ months after the last installment for full LTCG treatment.
Should I do STP from a lumpsum?
STP — park lumpsum in liquid, transfer monthly to equity — hedges between the two. Underperforms pure lumpsum long-run but reduces regret if markets crash week 1.
Is the backtest reproducible?
All Nifty monthly return values are embedded in the page. Open DevTools → Sources → search 'NIFTY_MONTHLY' to see them. Simulation runs entirely in your browser.