Rs 15,000 SIP VS Rs 15 Lakh Lump Sum: How Long Will It Take To Make Rs 1 Crore?
You can get to Rs 1 crore with both SIPs and lump sum investments, but the journey and risks are different.
Most of us are curious about investing through SIP or lump sum. Both can accumulate wealth, but the journey and risk stand apart. Let’s consider investing Rs 15,000 per month under SIPs and a lump sum payment of Rs 15 lakh to find out how both grow towards Rs 1 crore.
SIP: Discipline And Consistency
If you put Rs 15,000 a month in an equity-oriented mutual fund through SIP, rupee-cost averaging and compounding would help your cause. If the rate of return is 12% per annum, after about 17 years your corpus would be Rs 1 crore. The total amount of capital invested here would be around Rs 31 lakh, and the remaining would be by way of returns. The advantage of SIP is that it creates fiscal prudence and reduces the risk of investing at the wrong time. Market volatility is neutralised, which means you do not have to worry about timing the market. SIPs are convenient for salaried people since the investment is done over a period of time.
Lump Sum: Less Capital, Same Target
Here, too, if you invest Rs 15 lakh lump sum and stay invested for the same duration, which is 17 years with the same assumed return of 12% a year, your money would grow to around Rs 1 crore. But the main difference here compared to SIPs is that you are putting in less total capital here. You are investing Rs 15 lakh here compared to Rs 31 lakh in SIP contributions. Timing can also play a role here. Investing at the peak of a market bubble may mean it takes years for your portfolio to recover. Lump sum investing works best for high-risk investors or when markets are reasonably valued.
Which One Should You Choose?
Both methods can lead you to Rs 1 crore, but the decision depends on your risk bearing capacity. If you have a fixed income and like the process of hassle-free incremental method, SIPs are best. But if you already have a high amount in hand and can bear the volatility, lump sum investment can give higher returns in the long term. In brief, the path to Rs 1 crore can be done with SIP and lump sum equally. The importance is to begin early, remain invested and synchronise your approach with your comfort level and objectives.
