SIP vs Lumpsum: Difference Between SIP and Lumpsum?

SIP vs Lumpsum

Investing is putting away savings or surpluses for the future, with a motive to achieve a higher return in exchange for taking on some risk. Investing comes with choices. Apart from selecting different schemes to invest in, one also enjoys the right to choose the method to invest in mutual funds.

An investor comes with an option to either make a one shot investment in mutual funds also termed as lumpsum investment or can design to spread it out over a period of time through a systematic investment plan.

SIPs helps to inject money into any scheme periodically ranging from weekly to monthly or quarterly even half-yearly. Contrarily, lump-sum investments are a single season bulk investment in any scheme. The minimum investment amount also varies. One can start investing in SIPs with as low as Rs.500 per month while generally lump-sum investments need at least Rs.10, 000.

The methodology of investment can make a difference in one’s investment portfolio as well as the returns in the future. Twain SIP & lump sum investments empower investors to securely flair and create wealth through mutual funds. Basically, frequency of investment is the mainly how we can differentiate between SIP and lumpsum methods.

SIPs are more suitable option if an investor is available with small but regular amount of money. On the other hand investors with a relatively good investment amount and risk tolerance, lump-sum investments will be healthier.

Most investors emphasize on SIPs over lump-sum investments for the reason discussed ahead. Busy investors don’t have to monitor the market closely. With SIPs, one gets a chance to enter during different market cycles. One can begin investing in SIPs with as little as Rs. 500 per month, although most mutual funds in India have set the lower limit at Rs.  5,000. VSRK provides SIP calculator to calculate and estimate the returns on their SIP investment. Per unit cost is averaged out over the investment horizon. Which helps wind over market ups and downs with cost levelling. The interest earned on SIPs are reinvested and the compounding effect do wonders. SIPs motivates into the habit of saving frequently. 

The market experts do tell that those investors who are capable to invest a huge lump sum amount should recognize market cycles and invest at a market low which will garner high returns after a stipulated time period. Simple funda of buying low and selling high. Resulting in increase in investment value, at market high. Lump sum investment is ideal for Long-term tenure say for 10 years or more. Individuals can also choose to invest for a medium-term with a Debt fund. Lump sum amount should ideally be invested when the markets are already in a slump and is showing growth potentials. 


VSRK says choosing a SIP or a lump-sum investment primarily depends upon investors’ financial condition and requirements. Elements such as income, economic stability, financial goals, and risk appetite are studied for following the route of investment. Smartly, some form of investment is better than none.