Investing

SIP vs lump sum when inflation is not zero

If you already have the money and the chart only goes up, lump sum usually wins on paper. If you are human, you invest when salary lands, and the chart is rude, a SIP is how you keep doing the thing. Neither sentence is a recommendation. I am not SEBI-registered. Expense ratios, exit loads, and taxes still exist. The SIP calculator is a pencil: monthly amount, expected return, years, optional step-up, optional inflation. Toggle inflation so the ending corpus is not a poster number. SEBI publishes investor-education material on compounding and on not treating past returns as promises; treat that as context, not as a product pitch from me. Source for that context: SEBI.

Rupee cost averaging is the SIP slogan. You buy more units when NAV is low and fewer when it is high, so your average cost sits between the spikes. Lump sum buys once, at whatever the market is that Tuesday. In a steadily rising series, the Tuesday that was “as soon as I had the money” beats dribbling the same rupees in over ten years, because more of the money compounded for more of the time. In a jagged series, the averaging is emotional technology: you do not have to pick the Tuesday. This calculator will not predict next year’s index. It will show contribution math and inflation drag.

Nominal crores are a unit of marketing

A 12% illustration rate is common for equity-oriented SIP PDFs. It is not a guarantee. Debt-heavy funds will not behave like that. I keep 12% as a default because that is the number people argue about, not because I think your folio will print it. Inflation at 6% is the other number people argue about. The calculator deflates the ending corpus by (1 + inflation)^years. That smaller number is the one that pays rent in the year the SIP matures. If a distributor’s PDF only shows the nominal line, they are selling a poster, not a plan. Taxes on redemption — equity LTCG, debt taxation, surcharge — can rearrange the ranking. This page ignores them on purpose.

Step-up is the quiet lever. Raise the SIP 10% each year and later contributions do heavy lifting. January optimism is not a standing instruction. If you do not tell the platform, the chart is fiction.

Worked example: ₹5,000 a month, 12%, 10 years

Total invested = ₹6,00,000. Using the same month-by-month compounding the calculator uses (contribution added, then the month’s return), nominal corpus ≈ ₹11,61,695. Gains ≈ ₹5,61,695. Flip inflation to 6%: real corpus ≈ ₹6,48,685 in today’s rupees. You “made” about ₹5.6 lakh on a poster and about ₹49,000 of extra purchasing power after inflation ate the rest of the gain — plus you still have to pay whatever tax applies when you actually redeem. If that feels deflating, good. Rent in 2036 is not priced in 2026 rupees.

Same ₹6,00,000 as a lump sum on day one, 12% a year for 10 years: ≈ ₹18,63,509 nominal, ≈ ₹10,40,574 in 6%-inflation rupees. Lump sum wins because every rupee compounded for the full decade. The comparison is only fair if you actually had ₹6 lakh on day one and the nerve to put it in. Most SIP arguments start from salary, not from a pile. If you did not have the pile, you did not leave ₹7 lakh on the table. You compared two lives.

Worked example: averaging when the chart is rude

Three months, ₹5,000 each, so the arithmetic fits on a receipt. Month 1 NAV ₹100 → 50 units. Month 2 NAV ₹80 → 62.5 units. Month 3 NAV ₹100 → 50 units. Units = 162.5. Average cost ≈ ₹92.31. A lump sum of ₹15,000 at month-1 NAV would have bought 150 units. The SIP owns more units because it bought the dip. If month 2 had been ₹120 instead of ₹80, the ranking flips: SIP average cost rises, lump sum at the start looks clever. That is the whole debate, scaled down. Ten-year SIPs are this loop with better PR. I will not pick your Tuesday.

Worked example: ₹10,000 a month, 15 years, inflation on

Total invested = ₹18,00,000. Nominal corpus at 12% ≈ ₹50,45,760. Flip 6% inflation: real corpus ≈ ₹21,05,419. The crore-ish poster is a 2010s rent number. Step-up 10% on the ₹5,000-for-10-years case, no inflation: invested ≈ ₹9,56,245, nominal corpus ≈ ₹16,87,163. The extra contributions dominate the extra compounding. Run those knobs on the SIP page rather than trusting my rounding. Chart.js loads from a file host to draw the graph; your inputs stay in the tab. That hop is disclosed on the tool.

What this note adds that the calculator does not

The tool is three numbers plus two toggles. This note is the decision people actually fight about: lump sum if the cash is already there and you can sit through a drawdown; SIP if the cash arrives monthly and you need a process. Inflation is how you stop quoting a 2036 corpus in 2026 rupees. Rupee cost averaging is not a law of higher returns; it is a law of continuing. Not SEBI-registered advice. Read the scheme document for anything you might actually buy. If the corpus is large enough that 1% fees matter in rupees, bring a professional, not a browser graph.