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Investment & Wealth Creation
A SIP vs Lumpsum Calculator helps you decide the most profitable way to deploy a large amount of cash. If you just received an inheritance, a massive bonus, or sold a property, you face a critical dilemma: Should you invest all the money into the stock market today (Lumpsum), or should you hold it in a bank account and drip-feed it into the market slowly every month (SIP)?
Mathematically, if the stock market goes up over the long term, Lumpsum investing will beat SIP investing roughly 70% of the time. This is because of a principle called Time in the Market. When you invest via Lumpsum, 100% of your capital begins compounding from Day 1. When you SIP, your money sits in a low-interest bank account waiting to be deployed, missing out on months or years of stock market gains.
Despite the mathematical superiority of Lumpsum, SIP (often called Dollar Cost Averaging in the US) is incredibly valuable for two reasons:
Many investors try to hold their lumpsum cash, waiting for a "market crash" so they can buy at the bottom. Studies overwhelmingly show that investors who wait for crashes end up losing far more money (via missed compounding growth) than they ever save by buying the dip. The famous saying holds true: Time in the market beats timing the market.
Compares FV of SIP vs FV of Lumpsum compounding