Systematic Investment Plan (SIP) and lump sum investment are two popular ways to invest in the stock market.
Both aim to build wealth, but they follow different approaches.
Choosing the right method depends on market conditions, risk tolerance, and the investor’s available capital.
Experts’ Views on SIP and Lump Sum
Experts believe that SIP and lump sum are not substitutes but complementary strategies.
Ventura’s Director, Juzer Gabajiwala, explains that SIPs work in all conditions, even when the market is at its peak or likely to fall.
They allow wealth creation gradually.
Lump sum investment, however, is more effective when markets are rising steadily and the investor has a long-term horizon.
Performance Comparison: From August 2024 to July 2025, the Nifty 50 TRI index remained flat (37,050 → 37,159).
In this period, SIPs gave a return of 5.4%, while lump sum returned only 0.3%.
But when markets rise sharply, lump sum delivers better results.
For example, from April 2024 to August 2025, the Nifty rose from 33,066 to 36,709, giving a 7.7% CAGR on lump sum investments.
Expert Opinion – Mohit Bagdi (Moneyra Money): Lump sum works better in bull markets, while SIPs perform well in volatile or flat markets.
If timed correctly, lump sum gives higher gains, but SIPs reduce timing risk and benefit from cost averaging.
When to Choose SIP or Lump Sum?
Lump Sum Investment: Best when you have a large amount and expect a market rally.
The full amount grows from the start.
SIP Investment: Ideal during market corrections or volatility.
Small, regular investments help average the cost and reduce risks.
Also good for those who don’t have a lump sum available.
Experts add that SIPs are reliable in every market cycle.
If markets fall, you get more units; if they rise, you still earn steady profits.
Lump sum doesn’t offer this flexibility since it’s a one-time investment.
Striking the Right Balance
For long-term investors, combining SIP + Lump Sum is the best strategy:
SIP: Should be the foundation of a portfolio (10–15 years), covering large, mid, and small-cap funds.
Lump Sum: Useful when extra funds are available, especially during market declines.
For new investors: Start with SIP to build discipline and avoid market-timing risks.
For experienced investors: A hybrid strategy (part SIP, part lump sum) ensures consistent participation and balanced risk.
Example:
SIP of ₹1,000/month from March 2020 to August 2025 → Investment: ₹66,000 → XIRR: 14.7%.
Lump sum of ₹1,00,000 in March 2020 → CAGR: 16.6%.
This shows lump sum performs better in a long bull market, but SIP protects against volatility and builds financial discipline.
