What was the actual outcome of ₹10 lakh deployed as lumpsum vs 12-month SIP in January 2020?
Scenario
Investor A deploys ₹10 lakh into Nifty 500 index fund as one lumpsum on Jan 15, 2020. Investor B splits the same ₹10 lakh into 12 monthly tranches of ₹83,333. Both held through December 2021.
Inputs
- End date
- 2021-12-31
- Start date
- 2020-01-15
- Lumpsum INR
- 10,00,000
- Market event
- COVID drawdown March 2020, then recovery
- Monthly sip INR
- 83333
- Deployment window months
- 12
Calculation
- 1.
Investor A: Lumpsum value at March 23, 2020 (peak drawdown)
₹10L × 0.62 → ₹6.20 L
- 2.
Investor A: Lumpsum value at Dec 2021 (held through)
₹10L × 1.42 → ₹14.20 L
- 3.
Investor B: SIP value at Dec 2020 (₹10L invested across the year)
₹10L invested + ~28% net gain on weighted dates → ₹12.80 L
- 4.
Investor B: SIP value at Dec 2021
₹12.8L × ~1.20 → ₹15.30 L
Conclusion
12-month SIP (₹15.3L) outperformed held-lumpsum (₹14.2L) in this specific window because the SIP averaged into the March 2020 drawdown. However, lumpsum that PANIC-SOLD at the March bottom would have crystallised a 38% loss vs SIP's paper-only loss on ₹2.5L invested.
Tradeoffs
The historical 62% lumpsum win rate applies to BUY-AND-HOLD lumpsum. About 25-40% of retail lumpsum investors sell during drawdowns, converting the structural advantage into permanent loss. For investors with imperfect discipline, SIP is the more robust path.