How this calculator works
- Step 1The same available budget₹1,20,000.00All this money is assumed available at the beginning.
- Step 2Stage it monthly₹10,000.00Move a fixed part from the reserve each month.
- Step 3Count both accounts₹1,28,093.28The staged total includes the investment and remaining reserve.
A SIP is a regular investment schedule. A lump sum goes in at once. This comparison starts with the same available money and applies the same assumed investment return, but the investment dates are intentionally different.
The distinction matters: money still waiting to be invested is not missing. It stays in a reserve. Set the reserve return to zero if you want to assume it earns nothing, or enter a separate return assumption.
Worked example: one budget, two portfolios
- Monthly transfer
p = budget ÷ number of months- Immediate investment
lump = budget × (1 + monthly return)^months- Staged portfolio
staged = future value of monthly transfers + reserve balance
- BAvailable budget ₹1,20,000.00
- nNumber of months 12
- pMonthly transfer ₹10,000.00
- Budget divided across the period₹10,000.00
- Future value of the staged investment₹1,28,093.28
- Final reserve interest at the default reserve rate₹0.00
- Staged investment plus reserve₹1,28,093.28
- Same budget invested immediately₹1,35,219.00
At the default constant positive return, the immediate investment has more time in the investment account. That explains its larger illustrated value. It does not show that an actual market will rise smoothly or that investing immediately suits your circumstances.
The monthly transfer is calculated without rounding. Displayed rupees round to paise; this is not a payment instruction or a promise that an actual fund accepts the illustrated transfer.
Why the reserve account changes the comparison
- Zero reserve return₹1,28,093.28Waiting money earns nothing in the default scenario.
- Reserve assumption of 6% a year₹1,31,522.22Reserve interest remains in the cash account and counts in the total.
- Both accounts earn the same rate₹1,35,219.00The combined staged value matches immediate investment under the same growth assumption.
Each monthly transfer reduces the reserve’s original principal. Interest earned there remains in the reserve and can itself earn interest. The model transfers only the fixed instalment, not the accumulated interest.
When both accounts earn the same constant rate, moving money between them changes the label on the account, not the combined growth. This is a useful arithmetic check, not a claim that different real investments have equal risks or returns.
Compounding and transfer timing
The annual-rate convention and transfer date affect how many monthly growth periods each rupee receives.
Nominal divides each entered annual rate by twelve. Effective finds the monthly rate that compounds to the entered yearly return. The same choice applies to both the investment account and the reserve, so their rates are interpreted consistently.
Start-of-month transfers receive that month’s investment growth. End-of-month transfers remain in the reserve for that month instead. Immediate investment always starts at month zero. There are no actual trading dates, holidays or day-count adjustments.
For the staged investment, the calculator uses the ordinary-annuity formula for end timing. Start timing gives each transfer one additional growth period. The reserve uses the matching timing, so the same money is never counted in both accounts at once.
Read future rupees and today’s money separately
- Lumpsum in today’s money₹1,27,565.10Discounted using the entered effective annual inflation assumption.
- Staged total in today’s money₹1,20,842.72Includes reserve interest before the purchasing-power adjustment.
Today’s money expresses an estimated future amount in current purchasing power. It divides the final total by the inflation growth factor. It does not subtract inflation from the return or change the future account balances.
The balance table shows month zero, each completed year and the final month. Reserve balances before the final month include untransferred principal as well as interest. Downloading CSV preserves those same snapshots with unrounded numeric values.
What this comparison cannot decide
A constant-rate calculation isolates timing; it cannot choose how you should invest.
Both investment and reserve assumptions are nonnegative in this model. It does not simulate losses, volatile paths, changing rates or sequence-of-returns effects. Actual market outcomes can favour a different schedule and can leave you with less than you invested.
This comparison assumes all cash is already available. If your money arrives monthly from salary, you do not have the same starting choice without borrowing. Loans, liquidity needs, taxes, investment fees and exit loads are excluded.
Common comparison mistakes
Mistake: Ignore money waiting for the next monthly investment.
Instead: Include it in the reserve and state what return you assume it earns.
Mistake: Describe the two strategies as identical cash flows.
Instead: They share a starting budget but deliberately use different investment dates.
Mistake: Treat a positive simulated difference as advice.
Instead: Read it as an outcome of the chosen constant rates, not a predicted winner.
Mistake: Compare nominal and effective rates as though their labels do not matter.
Instead: Use the stated compounding convention consistently for both accounts.
Sources and numerical checks
Two independent cash-flow methods check the investment and reserve balances.
The equations follow OpenStax’s compound-value and annuity treatment. Golden tests compare the results with month-by-month balance simulations and separately grown transfer cohorts. Conservation, equal-rate identities, inflation round trips and CSV shapes are tested. Sources and review details appear below.
Each side on its own
This comparison sets two routes side by side. Each route also has a calculator with more options.
For monthly investing with step-ups and cost of delay, use the SIP calculator. For a single deposit with an inflation view, try the lumpsum calculator.
Past results are best measured with dated cash flows in the XIRR calculator.
Read how we test our calculators, or browse more money calculators.