The three ways to invest a sum
- Lumpsum: everything goes into the equity fund on day one.
- STP: the money sits in a liquid fund and moves into equity in equal monthly parts. Read more in the STP calculator.
- SIP from savings: the money sits in your bank account and you invest a part every month.
What the numbers mean
With one steady return, lumpsum is always highest, STP next and SIP from savings lowest. The gap is the price of spreading your entry. What the steady numbers cannot show is the risk: if the market falls 20% a month after a lumpsum, the lumpsum suffers the full fall, while STP and SIP keep buying at lower prices.
A simple rule many investors follow
- Monthly income → SIP.
- A large sum and a long goal → STP over 6 to 12 months.
- A small sum, or markets already well below their peak → lumpsum.
Frequently asked questions
Which is better, SIP or lumpsum?
With steady returns, a lumpsum always ends higher because all the money works from day one. In real markets, a fall soon after a lumpsum hurts a lot, while SIP and STP buy more units when prices are low. If the amount is large and the goal is long, many people choose STP as a middle path.
Why is STP higher than SIP here?
In the SIP option the money that is not yet invested waits in a savings account. In the STP option it waits in a liquid fund, which usually earns more.
Does this include market ups and downs?
No. It uses one steady return for each option so the comparison is clean. Real returns vary, which is exactly why SIP and STP exist.
What savings account rate should I use?
Most savings accounts pay 2.5% to 3.5% a year. Use your bank's rate.