₹25 Lakh Lump Sum vs ₹25,000 SIP: Which Can Help You Reach ₹10 Crore Faster?

Many aspiring investors dream of building a ₹10 crore corpus, but often face a practical dilemma: Should one invest a large sum upfront or commit to a monthly SIP? Both paths tap into the power of compounding, yet the mechanics and timeframes differ. The journey to that milestone depends on when and how the money is invested.

Understanding the Basics of Compounding

Compounding is central to long-term wealth creation. In a lump sum investment, the entire capital compounds from day one. In contrast, a SIP comprises multiple smaller investments made over time, each compounding for a different duration. The result? A different trajectory and timeline towards the same goal.

Scenario 1: SIP of ₹25,000 per Month for 30 Years

Let’s first examine the systematic investment approach. With a ₹25,000 monthly SIP invested over 30 years at an assumed return of 12.6% per annum:

• Invested Amount: ₹90,00,000 
• Estimated Corpus: ₹10,09,56,178 
• Estimated Returns: ₹9,19,56,178 

Despite investing smaller amounts monthly, the disciplined, long-term approach enables the investor to cross the ₹10 crore mark, thanks to the cumulative effect of compounding across multiple instalments.

Scenario 2: ₹25 Lakh Lump Sum Investment

Now, consider investing ₹25 lakh as a lump sum at the same expected return of 12.6%. The question becomes: how long will it take to grow this to ₹10 crore?

• Invested Amount: ₹25,00,000 
• Duration: 31 Years 
• Estimated Corpus: ₹9,89,98,843

In this scenario, compounding starts in full force from day one, but due to the lower capital compared to the total SIP outlay, the investment takes around 31 years to nearly reach the ₹10 crore milestone.

What These Numbers Reveal

Interestingly, both routes lead to a similar corpus, but the timelines and investment strategies differ:

• The SIP route requires a higher total capital investment but reaches the goal in 30 years. 
• The lump sum requires a longer timeframe—31 years—but with significantly less invested capital.

This contrast underscores the trade-off between time and money in financial planning.

Using Calculators to Simulate Your Own Journey

Whether planning to invest via SIP or lump sum, online investment calculators can provide clarity. These tools allow individuals to plug in their expected rate of return, tenure, and investment amount to visualise their path towards specific financial goals like the ₹10 crore corpus.

Conclusion

Both systematic and lump-sum investing are effective in their own right. While a ₹25 lakh lump sum benefits from early compounding, a ₹25,000 monthly SIP builds momentum over time with consistent contributions. Each path has its place depending on available capital and time horizon, but both showcase the incredible power of compounding over the long term.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.