When it comes to wealth building, one of the most common dilemmas investors face is:
👉 Should I start a Systematic Investment Plan (SIP) or make a Lump Sum investment?
Let’s break down how both strategies perform when the goal is to reach ₹1 crore.
Scenario 1: Rs 15,000 SIP Investment
Investment Amount: ₹15,000 per month
Annual Return Assumption: 12% CAGR (equity mutual funds average long-term returns)
Goal: ₹1 crore
🔹 With a ₹15,000 SIP, you will reach ₹1 crore in around 19 years.
Total Invested: ~₹34.2 lakh
Wealth Created: ~₹65.8 lakh (gains)
The power of compounding makes SIPs attractive for disciplined investors.
Scenario 2: Rs 15 Lakh Lump Sum Investment
Investment Amount: ₹15,00,000 (one-time)
Annual Return Assumption: 12% CAGR
Goal: ₹1 crore
🔹 A one-time investment of ₹15 lakh will grow to ₹1 crore in around 16 years.
Wealth Created: ~₹85 lakh (gains)
Since compounding starts on the full amount from Day 1, a lump sum is faster.
SIP vs Lump Sum – Key Differences
| Feature | Rs 15,000 SIP | Rs 15 Lakh Lump Sum |
|---|---|---|
| Investment Discipline | Monthly commitment | One-time |
| Risk Management | Reduces market timing risk | Higher market timing risk |
| Time to ₹1 Crore | ~19 years | ~16 years |
| Total Invested | ~₹34.2 lakh | ₹15 lakh |
| Flexibility | High | Low |
Which One Should You Choose?
Choose SIP if:
You don’t have a large sum right now.
You want to reduce market timing risks.
You prefer building wealth gradually.
Choose Lump Sum if:
You already have a large corpus ready.
You are comfortable with market volatility.
You want to maximize compounding from the start.
👉 Balanced Approach: Many investors prefer a mix – deploying part of their funds as a lump sum and continuing with SIPs for stability.
Conclusion
Both SIP and Lump Sum are powerful investment routes, but the choice depends on your financial situation, risk tolerance, and cash flow.
Lump Sum reaches ₹1 crore faster (16 years).
SIP requires more time (19 years) but offers flexibility and lower risk.
In the long run, consistency matters more than timing. The best investment plan is the one you can stick to comfortably.
❓ FAQs
Q1. Which is better: SIP or Lump Sum?
Both have pros and cons. SIP reduces risk by spreading out investments, while lump sum benefits from compounding if invested early.
Q2. Can SIP returns beat Lump Sum?
Yes, if the market falls after your lump sum investment, SIP may perform better since you buy at lower levels over time.
Q3. How safe is investing ₹15 lakh at once?
It depends on your risk tolerance. For equity funds, it’s better to stagger investments if markets are highly volatile.
Q4. Is 12% CAGR realistic for mutual funds?
Historically, equity mutual funds have delivered 10–12% CAGR over the long term, but returns are not guaranteed.
Q5. Can I combine SIP and Lump Sum?
Yes, many investors use a hybrid strategy—investing a lump sum during market corrections while continuing with SIPs.
Published on : 1st September
Published by : SMITA
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