SIP Vs Lump Sum: Which ₹25,000 Strategy Builds A Bigger Retirement Corpus By 60?

Building a multi-crore retirement corpus is a financial goal shared by many. However, the right investment strategy can significantly influence the outcome. Two common approaches are systematic investment plans (SIPs) and one-time lump sum investments. In this article, we explore how much wealth a person can potentially accumulate with a monthly SIP of ₹25,000 or a lump sum of ₹25 lakh when started at different ages. The calculations use a standard annualised return estimate and are purely indicative. According to financial experts, both approaches can be effective depending on the individual’s age, risk appetite, and long-term commitment.

₹25,000 Monthly SIP Starting At Age 25

If a 25-year-old commits ₹25,000 every month into a mutual fund SIP and continues until the age of 60, the investment tenure spans 35 years. Assuming an annualised return of 12%, the accumulated retirement corpus can reach approximately ₹13.77 crore. This long horizon allows compounding to work at its strongest, showcasing the power of early and consistent investing.

Starting SIP At Age 30: What Can You Expect?

A person who delays the start of their SIP to age 30 would invest over a 30-year period. With the same monthly amount of ₹25,000 and a 12% annualised return, the corpus can grow to around ₹7.7 crore. Although substantial, this outcome demonstrates the opportunity cost of delaying investment by just five years. Starting earlier clearly has a dramatic impact on long-term wealth creation.

A 35-Year-Old Investor’s SIP Journey

For those beginning a ₹25,000 monthly SIP at age 35, the remaining investment horizon before retirement is 25 years. At a 12% annualised return, such an investor could accumulate a corpus of around ₹4.25 crore. While this is a respectable amount, the difference compared to starting ten years earlier is significant. According to experts, this underlines the importance of time over amount when it comes to compounding.

Lump Sum Investment Of ₹25 Lakh Over 35 Years

Now consider a one-time investment of ₹25 lakh made at age 25 and left untouched for 35 years. Assuming the same 12% annualised return, the corpus at age 60 could grow to around ₹13.2 crore. This closely mirrors the result of the ₹25,000 SIP strategy started at the same age, although the paths to reach the goal are different. Financial advisors point out that lump sum investments rely heavily on market timing and immediate fund availability.

₹25 Lakh One-Time Investment At Age 30

If the lump sum investment of ₹25 lakh is made at age 30 and held for 30 years, the corpus can grow to around ₹7.49 crore by retirement. The result is again similar to what a 30-year-old SIP investor might expect. However, SIPs offer the advantage of rupee cost averaging, especially helpful in volatile markets.

How A 25-Year Investment Horizon Changes Outcomes

When ₹25 lakh is invested as a lump sum at age 35 and kept for 25 years, the final corpus reaches about ₹4.25 crore. This aligns with the result of a SIP strategy started at the same age. In this case, the end results are similar, but experts advise that SIPs could reduce emotional stress caused by market fluctuations.

The Role Of Expected Returns In Projections

All projections in this comparison use a hypothetical annualised return of 12%, which is commonly used in mutual fund illustrations. However, experts caution that actual returns may vary depending on market conditions, fund selection, and economic cycles. Past performance is not a guarantee of future returns, and it is important to review and adjust investment plans periodically.

What Experts Recommend

According to financial advisors, SIPs provide a more disciplined and accessible route to wealth creation for most individuals, particularly those without large sums available for one-time investments. They encourage investors to begin as early as possible, remain consistent, and review their financial goals regularly. Lump sum investments, while effective, require proper timing and a higher risk tolerance, especially during market volatility.

Whether you choose a SIP or lump sum route, both can lead to multi-crore retirement funds if started early and managed consistently. The key differentiator remains the time in the market rather than timing the market. Regardless of the method, aligning your strategy with financial goals and professional guidance can enhance long-term success.

Disclaimer: This article is for informational purposes only. All figures are based on assumed returns and projections. Actual results may vary. Please consult a certified financial advisor before making any investment decisions.