SIP vs Lumpsum: How Contribution Timing Changes the Projection

Timing—not a universal winner—drives this comparison

A lumpsum placed at the start has the full period in the projection. SIP capital enters month by month, so later contributions have less time to grow. When total capital, duration and assumed annual return are held constant, that timing difference changes the projected value.

This mathematical comparison does not establish which approach is suitable or which will produce a better real-world outcome. It isolates contribution timing under a smooth-return model.

What the comparison holds constant

• Total capital contributed: ₹6,00,000 in both cases.
• Duration: 10 years.
• Assumed annual return: 12% in both projections.
• Fees, taxes and withdrawals: excluded.
• SIP timing: ₹5,000 at the beginning of each month for 120 months.
• Lumpsum timing: the full ₹6,00,000 at the start of the 10-year period.

Controlled projection with equal contributed capital

The SIP uses the site's monthly beginning-of-month convention. The lumpsum compounds once per year at the same entered annual rate. The conventions match the corresponding ArthaSiddhi tools.

Why the projected values differ

The difference is not created by contributing more to the lumpsum: both rows use ₹6,00,000. It arises because every rupee of the lumpsum is present from the start, while much of the SIP capital arrives years later.

For a closer look at the monthly timing mechanics, read how SIP contributions build the projection.

Real markets do not follow the smooth comparison

Market returns do not arrive as a constant 12% each year or 1% each month. Prices can rise or fall between contributions, so the actual sequence of returns can change the outcome for both approaches.

The example also assumes the full lumpsum is available on day one. If capital becomes available gradually, that is a different cash-flow situation and should not be presented as the same comparison.