How A ₹2 Lakh Lump Sum & ₹1,500 SIP Could Deliver A Bigger Corpus In 25 Years

Mutual funds offer investors flexibility in how they choose to invest — either through regular monthly contributions known as a Systematic Investment Plan (SIP) or through a one-time lump sum investment . However, according to experts, merging these two strategies in the same fund can have a powerful compounding effect, potentially leading to a significantly higher maturity amount compared to keeping them separate. A calculated mix of lump sum and SIP contributions could accelerate wealth creation over the long term and help investors reach their financial goals faster.

Understanding SIP And Lump Sum Investments

A SIP involves investing a fixed sum in a mutual fund at regular intervals, usually monthly, over a chosen time period. This approach benefits from rupee cost averaging and disciplined investing. A lump sum investment, on the other hand, means committing a larger amount at one time and allowing it to grow over the investment horizon. Both methods have distinct advantages, but when combined strategically in the same fund, the overall outcome can be even more rewarding.

The Impact Of Combining Investments In One Fund

Consider an investor who begins with a lump sum of ₹2,00,000 in a mutual fund and simultaneously sets up a ₹1,500 monthly SIP in the same scheme for 25 years. Assuming an annualised return of 12 per cent, the lump sum could grow to around ₹34 lakh, while the SIP could build approximately ₹28.46 lakh over the same period. Together, this results in a corpus of nearly ₹62.47 lakh — notably higher than investing through SIP alone.

Comparing With SIP-Only Investments

If the same investor chose to invest only ₹1,500 per month via SIP for 25 years, the corpus would be roughly ₹25.53 lakh at maturity, based on the same 12 per cent return assumption. This demonstrates how the initial lump sum creates a head start for compounding, accelerating the overall growth. The gap of nearly ₹37 lakh in the maturity value between the combined approach and SIP-only investing highlights the effectiveness of merging both strategies.

What Happens With Separate Investments

Some investors may prefer to keep SIP and lump sum amounts in different funds. For instance, placing a ₹1,500 SIP for 25 years in one mutual fund could yield around ₹25.53 lakh, while a separate ₹2,00,000 lump sum in another fund might grow to roughly ₹34 lakh. In this case, the combined value would be about ₹59.53 lakh — still substantial but lower than the ₹62.47 lakh that could result from consolidating both investments into the same fund.

Why The Combined Approach Works Better

According to market experts, the reason for this difference lies in how compounding works. By combining both the lump sum and SIP in a single fund, the total invested amount benefits from growth on the entire combined capital rather than on two smaller, separate amounts. The effect is magnified over long periods, such as 25 years, making this approach particularly beneficial for long-term financial goals like retirement or wealth creation.

Factors To Consider Before Implementing This Strategy

While the numbers may look attractive, investors should remember that mutual funds are subject to market risks, and past performance is not an indicator of future returns. It is also important to choose a fund with a consistent track record, strong portfolio management, and alignment with your risk profile. Additionally, regular reviews of your investment plan can help you stay on track and make adjustments as required.


Disclaimer: This article is for informational purposes only and does not constitute financial advice. The figures provided are based on assumed annualised returns of 12 per cent, which may vary depending on market conditions. According to experts, investors should consult a certified financial advisor before making any investment decisions to ensure the strategy aligns with their personal goals and risk tolerance.