Lump Sum vs SIP Investment: Age 40 and want to make Rs 2,00,00,000 retirement fund? Know how much monthly or one-time investment you need to do

In this article, we will understand how you can achieve your financial goals even if you start investing late. For example, if your age is 40 and you want to accumulate a Rs 2,00,00,000 corpus by retirement, then how much monthly SIP you need to do to achieve your financial goal. Similarly, we will calculate for the lump sum investment.

In SIP, you invest a fixed amount of money into a mutual fund at regular intervals, such as daily, weekly, monthly, quarterly, half-yearly or yearly.

A lump sum investment involves making a sizable payment all at once rather than making smaller payments over time. 

Investors who are long-term thinkers and risk-takers should try this method of investment.

At age 40, if you start investing Rs 21,800 per month for 20 years, then you can achieve your financial goal of accumulating Rs 2 crore.

Total investment: Rs 52,32,000 Estimated returns: 1,48,20,890 Total value: 2,00,52,890

If you want to invest money in one time, then you need to invest Rs 20,74,000 to achieve your financial goal of accumulating Rs 2 crore.

Total investment: Rs 20,74,000 Estimated returns: 1,79,32,412 Total value: 2,00,06,412

In the above examples of SIP and lump sum investments, the rate of return is expected to be 12 per cent per annum.

From the above comparison, we understand that if you make a one-time investment in mutual funds, then you need to invest a smaller amount to achieve the financial goal. While, in SIP investment, you end up investing more than 2.5x money to accumulate the retirement corpus of Rs 2 crore.

Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.