Bonus investing: SIP vs lump sum (the math might surprise you)

When your bonus arrives, most Indians face the same choice: dump it all in at once, or spread it monthly. Let's test both with real numbers.

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Lump sum: assume you invest your entire two lakh rupees bonus today in an index fund. Historical market volatility means you might catch a peak or a dip — timing matters.

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SIP approach: invest the same two lakh rupees over ten months — twenty thousand rupees monthly into the same fund. You smooth out market ups and downs, removing the fear of bad timing.

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The catch: lump sum wins in a rising market. Over fifteen years, assuming a twelve percent historical annual return, lump sum could grow to around eight point six lakh rupees.

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But SIP wins in a falling or sideways market — you buy more units when prices dip. The emotional win? You sleep better. No regret, no panic selling.

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The real lesson: if you can't stomach seeing your bonus drop fifty percent tomorrow, SIP removes that stress. If markets are cheap right now by your analysis, lump sum might reward patience.

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