SIP or lump sum: how the two work
Both buy the same fund. They differ in when the money goes in.
Updated 23 Oct 2026 · 2 min read
A SIP
A systematic investment plan buys a fixed amount of the fund on a set date every month (or week, or quarter). When the NAV is low the same amount buys more units; when it is high it buys fewer. Over time your average cost per unit sits below the average NAV, a result called rupee cost averaging.
A lump sum
A one-time investment puts the whole amount in at once, at one day's NAV. All of it is exposed to the market from that day.
How they compare
- When markets rise steadily, money invested earlier has longer to grow, so a lump sum ends ahead.
- When markets fall soon after you invest, a SIP buys more units at the lower prices and recovers faster.
- When the money arrives monthly, as a salary does, a SIP matches how you earn.
- Some people combine them: a lump sum spread over several months with a systematic transfer from a liquid fund. STP and SWP explains how.
Try it on a real fund
Every fund page has a calculator showing what a SIP or a lump sum started 1, 3, 5 or 10 years ago would be worth today, from the fund's own prices. The SIP calculator and lump sum calculator work at a return you choose.
Questions
Is a SIP safer than a lump sum?
A SIP spreads the price you pay over time. The fund's risk is the same; what changes is how much of your money is exposed to any one day's price.
Can I add a lump sum to a fund I hold by SIP?
Yes. Additional purchases go into the same folio.
Each fund page has its returns, risk, costs, managers and everything it holds.
This guide explains how things work. It is not investment, tax or legal advice. Rules change; check the fund house's documents, and a qualified adviser for your own case.