# SIP vs lump sum

> Compare investing a sum all at once with spreading it over monthly SIP instalments, including what happens if the market falls in the first year.

Canonical: https://www.moneyplain.app/tools/sip-vs-lumpsum

Invest it all now, or spread it out over months? This is an interactive calculator that runs in the browser: [open it](https://www.moneyplain.app/tools/sip-vs-lumpsum) to try your own numbers.

## How this works

Lump sum: the whole amount grows from day one. SIP: `amount ÷ months` goes in at the start of each month, and the money not yet invested earns the savings rate. Both grow monthly; the first 12 months use the first-year return you choose.

### What it assumes

- Markets rise more often than they fall, so investing at once usually wins. Vanguard found a lump sum beat spreading it out about two-thirds of the time in [US, UK and Australian market history](https://corporate.vanguard.com/content/dam/corp/research/pdf/cost_averaging_invest_now_or_temporarily_hold_your_cash.pdf).
- A SIP protects you from investing everything just before a fall. That is worth something if a loss would make you sell in a panic.
- This compares money you already have. If you invest from your salary each month, that is a SIP by necessity, and the monthly investing calculator fits better.
- No taxes, fees or exit loads, and one smooth return after the first year. Real markets are lumpier.

### Worked example

Invest $12,000 at once, or over 12 months with the waiting money in savings at 4%, then leave it for 10 years at 10% a year. In a normal first year the lump sum ends at about **$32,346** and the SIP at $31,298. If the market falls 30% in the first year instead, the SIP comes out ahead: about **$24,690** against $20,584.

Invest ₹10,00,000 at once, or over 12 months with the waiting money in savings at 4%, then leave it for 10 years at 10% a year. In a normal first year the lump sum ends at about **₹26,95,492** and the SIP at ₹26,08,189. If the market falls 30% in the first year instead, the SIP comes out ahead: about **₹20,57,539** against ₹17,15,313.

### Learn the idea behind it

- [Risk and reward are the same coin](https://www.moneyplain.app/learn/risk-and-reward)
- [Index funds and diversification](https://www.moneyplain.app/learn/index-funds-diversification)
- [Compounding: small numbers, big outcomes](https://www.moneyplain.app/learn/compounding)

Terms used here: [SIP](https://www.moneyplain.app/glossary#sip), [Dollar-cost averaging](https://www.moneyplain.app/glossary#dollar-cost-averaging), [Opportunity cost](https://www.moneyplain.app/glossary#opportunity-cost), [Drawdown](https://www.moneyplain.app/glossary#drawdown).

---

Educational content only; not financial, investment, tax, or legal advice. Numbers are simplified illustrations, not predictions. Source: Moneyplain (https://www.moneyplain.app/).