Lump sum vs. SIP is a meaningless comparison

              Lump sum vs. SIP

‘Which is better? Another school of thought believes in creating a lump sum and waiting for market dips instead of a SIP. The trouble with this approach is that, one may have to wait for months and months for an investment opportunity to show up. The bigger problem is how the opportunity is defined.

Lump Sum vs SIP: Why This Comparison Misses the Point
“Should I invest via SIP or lump sum?”

This is one of the most common questions I hear in meetings, workshops, and emails, whatsapp.

The problem is not the question. The problem is the misunderstanding behind it.

A SIP is not a risk-elimination tool. It is a cash-flow solution. If you already have a lump sum that you can invest for 10 years or more, the rational choice is to deploy it as early as possible. Delaying deployment only increases opportunity cost. Spreading it over long periods does not meaningfully reduce risk.

A SIP only averages the next installment, not your entire portfolio.
After one year of a ₹10,000 monthly SIP, ₹1.2 lakh is already fully exposed to market volatility.
After five years, ₹6 lakh behaves exactly like a lump sum investment. At that point, there is no “averaging benefit” left.

STPs work the same way. They do not reduce market risk. They merely soften investor anxiety. In practice, STPs outperform lump sums only about 25–35% of the time and are primarily psychological tools. Waiting for market dips sounds smart, but markets do not run on calendars or comfort. Most investors end up waiting far longer than intended and miss the compounding window.

The real rule is simple: • Lump sum available + long time horizon → invest early
• No lump sum → SIP makes sense
• Short horizon → equity is the wrong asset
Clarity beats complexity. Discipline beats timing.

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Ritesh Sheth CWM®
AMFI Registered Mutual Fund Distributor (ARN-0209)
IRDAI Registered Insurance Agent

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