SIP Vs Lump Sum — Who Reaches Rs. 1 Crore First?

Assume your long-term financial goal is to build a corpus of ₹1 crore. Now, let’s compare the following two scenarios over 10 years:

• Assume that you had started a monthly SIP of ₹10,000 for 10 years. It resulted in a total investment of ₹12,00,000 over 10 years (₹10,000 × 12 months × 10 years OR

• You invested a lump sum of ₹12,00,000 at the beginning of the same 10-year period.

   

The outcome in both cases depends on how the investments compound over time. Since market returns are not fixed, three annual return scenarios have been assumed: 8%, 10%, and 12% (only for explanatory purposes).

Now, let’s check out the following under each scenario:

• The value of the SIP investment at the end of 10 years

• The approximate time required to accumulate a ₹1 crore corpus via a ₹10,000 SIP

• The value of a ₹12,00,000 lump sum investment after 10 years

• The approximate time required to accumulate a ₹1 crore corpus via ₹12,00,000 lumpsum investment

   

Note: All the above calculations have been made using the SIP calculator offered by Tata Mutual Fund™.

Note that a ₹10,000 SIP for 10 years is not enough to reach ₹1 crore (regardless of return). Even at a strong 12% annual return, your SIP of ₹10,000 for 10 years could have grown to only ₹23 lakh after 10 years. This shows that time, not just returns, is the dominant factor in potential wealth creation.

Additionally:
 

A) Higher Returns Accelerate Growth, But Only Marginally in the First 10 Years.

As observed in the table above,

• At 8%, you could have accumulated ₹18.29 lakh

• At 10% your final amount could be ₹20.48 lakh 

• At 12%, it would have been ₹23.00 lakh.

The difference between 8% and 12% over 10 years is only about ₹4.7 lakh. This shows that compounding needs more time to show dramatic differences.
 

B) The Time Required To Reach ₹1 Crore Reduces Sharply With Every 2% Increase In Returns.

You can observe that it would have taken 26 years to accumulate ₹1 crore when your investments stayed invested at 8%. This time decreases to 23 years and 21 years at 10% and 12 % respectively. 

Thus, just a 4% difference in returns (12% - 8%) reduces the time to ₹1 crore by 5 years. This shows how even marginal increases in your rate of returns can significantly accelerate your wealth-building journey.
 

C) Lumpsum Investments Lead to Faster Accumulation of Corpus

A ₹12 lakh lump sum investment benefits from full capital compounding from the very beginning, which is why its value after 10 years is significantly higher than the amount invested via the SIP route. Also, the time period required to reach a ₹1 crore corpus is faster compared to SIP.

Now, let’s again assume your long-term financial objective is to build a corpus of ₹1 crore. But this time, let’s say you had:

• Invested via SIP of ₹10,000 for 20 years, resulting in a total investment of ₹24,00,000 (₹10,000 × 12 months × 20 years) and

• Made a lump sum investment of ₹24,00,000 (invested at the beginning of the same 20-year period).
   

Again, let’s consider three return scenarios of 8%, 10%, and 12% to see:

• The value of the investment at the end of 10 years

• The approximate time required to accumulate a ₹1 crore corpus via a ₹20,000 SIP

• The value of a ₹24,00,000 lump sum investment after 10 years

The approximate time required to accumulate a ₹1 crore corpus via ₹24,00,000 lump sum investment
 

Note: All the above calculations have been made using the SIP calculator provided by Tata Mutual Fund™. 

You can observe that two decades of discipline nearly delivered ₹1 crore at 12%.  With ₹10,000 monthly SIP for 20 years (approx.), you would have accumulated ₹98.92 lakh at 12% (just shy of ₹1 crore). The same monthly habit that gave only about ₹23 lakh in 10 years nearly quadrupled over the next decade. 
 

Additionally:
 

A) Returns Matter More Over Long Horizons, But Time Still Wins

Over 20 years, your ₹10,000 SIP would have grown differently depending on the return:

• At 8%, you could have accumulated ₹58.9 lakh

• At 10%, it would be ₹75.9 lakh

• At 12%, it would be ₹98.9 lakh

This shows that better returns definitely help, and over long periods, they could add several lakhs to your final corpus.

But the bigger lesson is that “time is the strongest force in investing”. The jump you saw when moving from a 10-year SIP to a 20-year SIP is much larger than the change caused by a 2% or 4% difference in returns. Thus, staying invested for more years often has a bigger impact than trying to earn marginally higher returns.
 

B) Higher Returns Add More Money as the Years Go By!

When you look at the 20-year results, moving from 8% to 10% gives you about ₹17 lakh extra, and moving from 10% to 12% gives you about ₹23 lakh extra. This represents the “accelerating effect of compounding”.

When you stay invested for many years, every small increase in return (like going from 10% to 11% or 11% to 12%) adds more money to your final amount. 

In the early years, a 1% difference doesn’t change much. But after 15 to 20 years, that same 1% boost can add several lakhs. Why? That’s because your corpus has grown bigger, and now that larger amount is compounding at a higher rate.

So the longer you invest, the more powerful each extra 1% return becomes.
 

C) Lump sum Investments Let You Accumulate Faster

The ₹24 lakh lump sum investment grows faster than the SIP, because the entire amount is invested from day one. This allows compounding to work on a larger base for a longer time.

As a result, the ₹1 crore corpus is reached in only 13 years (at 12% returns) as compared to 21 years in the SIP mode.

Now, instead of a ₹10,000 SIP, let’s say you had invested ₹2 lakh as a lump sum (without any fresh contributions). Check how this one-time investment would have compounded over the years:

A ₹2 lakh investment in the lump sum mode grows comparatively slower. Even after 20 years, the amount remains below ₹20 lakh in all scenarios. This shows that putting in a small one-time amount and waiting is not enough to reach big goals like ₹1 crore. Without fresh contributions, growth is naturally limited.

Additionally, time alone cannot compensate for low starting capital. Even with 50 years of compounding at 8%, your ₹2 lakh still fails to reach ₹1 crore. This proves that to produce large amounts, compounding needs either:

• High returns OR

• Regular contributions 

From all the scenarios above, it becomes clear that reaching ₹1 crore depends mainly on two factors: 

• How much money do you invest? and

• How long do you stay invested?

A ₹2 lakh lump sum, even with good returns, takes the longest time (35 to 50+ years) to reach ₹1 crore. This shows that a small one-time investment alone is usually not enough for large goals.

Between SIP and lump sum with comparable amounts, a ₹24 lakh lump sum invested upfront reaches ₹1 crore the fastest, in about 13 to 19 years. Why? That’s because the entire capital compounds from day one.

However, this requires having a large amount available upfront. And if that’s not feasible, investors may also begin with a ₹10,000 monthly SIP for 20 years. It nearly reaches ₹1 crore in about 21 years (at 12% return) to 26 years (at 8% return).

Note: 

1. Mean of 10 year rolling return between 01/06/14 and 31/05/24 for Sensex is CAGR 12.62%, Nifty 50 is CAGR 12.42%, Nifty 500 is CAGR 12.80%, CRISIL Composite Bond Index is CAGR 7.85% & Gold is CAGR 8.84%. 

2. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

Find more ideas on how to start investing with just ₹1,000/Month or ₹10,000/Month?

The views mentioned above are for information & educational purposes only and do not construe to be any investment, legal, or taxation advice. Investors must do their own research before investing. The views expressed in this article are personal in nature and in is no way trying to predict the markets or to time them. Any action taken by you on the basis of the information contained herein is your responsibility alone, and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action taken by you. Please consult your Mutual Fund Distributor before investing. The views expressed in this article may not reflect in the scheme portfolios of Tata Mutual Fund. There are no guaranteed or assured returns under any of the schemes of Tata Mutual Fund.