The real question behind "SIP or lumpsum?"
People often compare a ₹10,000 SIP with a ₹10,000 lumpsum, but that's not a real choice. The real choice comes when you already have a large amount, such as a bonus, property sale proceeds or FD maturity, and must decide whether to invest it all today or feed it in gradually. The gradual route in India is usually a Systematic Transfer Plan (STP): park the money in a liquid fund and transfer a fixed amount into an equity fund every month.
Worked example
Money invested earlier compounds longer at the higher rate.
While waiting, the liquid fund earns less than equity.When spreading makes sense anyway
- Markets have run up sharply and a fall soon after investing would shake your confidence. An STP limits regret.
- The amount is large relative to your portfolio, say more than a year's income. Timing risk matters more for bigger sums.
- You're new to equity. Seeing smaller amounts move first helps you learn how volatility feels.
Picking the spread period
Stretching an STP over 3–12 months is common. Going longer than a year keeps too much money waiting in low-return funds, which is a cost in itself. Each transfer counts as a new purchase, so for equity funds, each instalment's 12-month holding period for long-term capital gains starts on its own date.
For an ongoing monthly habit from salary, use the SIP calculator. For a single amount left alone, see the lumpsum calculator.
Frequently asked questions
Which is better, SIP or lumpsum?
For money you already have, investing it all at once has historically come out ahead more often, because it's invested for longer. Spreading it out reduces the risk of bad timing and regret.
What is an STP?
A Systematic Transfer Plan moves a fixed amount from one fund (usually liquid or ultra-short debt) to another (usually equity) on a set date every month.
Is there tax when the STP transfers money?
Yes. Each transfer redeems units from the source fund, which can trigger a small capital gains tax on the liquid fund's gains.