• Source:JND

In the last decade, Mutual funds have firmly established themselves as one of the most preferred investment options among Indians. Investors from all age groups, ranging from their 20s to retirement, whether their aim is to achieve a short-term financial goal or accumulate a decent corpus over the long run, are increasingly putting their money into these instruments. 

However, a persistent debate over the method of investment always remains among investors as they always argue whether they would make a good money by investing through a monthly Systematic Investment Plan (SIP) or a lump sum amount. The question is usually asked by Investors having an aggressive risk appetite.

To address this aggressive debate, let’s consider a scenario assuming an aggressive expected return of 12 per cent over 10 years and compare the two approaches: a one-time Lump Sum investment of Rs 10 Lakh versus a Systematic Investment Plan (SIP) of Rs 10,000 per month. 

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Rs 10 Lakh Lump Sum Vs Rs 10,000 SIP For 10 Yrs; Which Strategy Can Yield More Returns

Investment- Rs 10,00,000 (One Time)

Amount- Rs 1000000

Period - 10 Years

Expected Interest Rate - 12% CAGR

After 10 Yrs Estimated Returns - Rs 21,05,845

Total Return: Principal amount + Return = Rs 31,05,848 

Rs 1,000 SIP Calculation 

Monthly Contribution- Rs 10,000

Expected Return Rate- 12% CAGR

Tenure - 10 Years

Total Investment - Rs 12,00,000

Estimated Return Value - Rs 10,40,359 

Total Value - Rs 22,40,359 

As per the calculation, the Lump Sum strategy generated a total return of Rs 31,05,848. In contrast, the SIP contribution for 10 years, which involved a total investment of Rs 12 Lakh, accumulated a total value of Rs 22,40,359.

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The calculation provides a clear answer regarding total value accumulation over this period. Ultimately, however, investors must choose a method based on their financial goals and risk appetite. Investing a lump sum amount can be easy for a person sitting with cash in their account, while SIP could be great for those having a monthly income. 

Disclaimer: This story is for informational purposes only. The investment in equity schemes is subject to market risk. Please consult your investment advisor before investing. All the calculations are made based on assumptions. 


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