Written by Upstox Desk
6 min read | Updated on July 31, 2025, 18:25 IST
Summary:
Definition of ELSS investment
SIP Vs Lumpsum: Understanding the differences
Choosing between SIP and Lumpsum: What is better for you?
To sum it up
Disclaimer
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.
Equities are inherently volatile in nature, hence various tools, strategies and schemes have been designed to invest as safely as possible. However safety is not everyone’s priority. There are various investors seeking higher returns and they are willing to take risks. SIPs and Lumpsum are two investment options catering to the contrasting needs of investors.
The booming stock market in India and extensive government led awareness campaigns and financial literacy initiatives have augmented the growing fandom of SIP. It stands for systematic investment plan (SIP) and is gaining substantial popularity in India. In this blog we will uncover the difference between SIP and lumpsum, understanding the key differentiators. We will also look at the lumpsum and SIP calculator. By the end of this blog, you will be able to determine which is best for your ELSS investment. But first, let’s understand what an ELSS investment is.
An equity linked savings scheme (ELSS) is tax-saving mutual fund scheme that helps you save taxes and generate reasonable income at the same time. According to the Securities & Exchange Board of Inia (SEBI), a minimum of 80% of the assets within the ELSS mutual fund must go into equity. Meanwhile, a portion of the underlying assets can be secured into low risk fixed income securities like government bonds to balance out the portfolio.
ELSS funds have a lock-in period of 3 years, the lowest among all other tax saving instruments like public provident fund (PPFs) and fixed deposit (FDs). However, it is essential to note that there is no way to redeem your units within the lock-in period. Also, there is a high risk involved from the volatile nature of equities and may not be best suited for the risk-averse investors. Having said that, the potential for significant capital appreciation over time and thus make a good choice if you have access to long-term investment horizon. Now the question is which way to go, SIP or lumpsum.
Getting a thorough overview of the key differences in SIP and lumpsum -
Differentials | Systematic investment plan (SIP) | Lumpsum |
Definition | A strategic plan to invest a set amount of money at regular intervals (weekly, monthly or quarterly) in mutual funds. This amount is automatically deducted from the investors based on the interval selected. | Lumpsum investments refers to one-time payment made at the start of the investment period. This is the case when investors choose to invest all the money available in mutual funds or another instrument. |
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Disadvantages |
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Lumpsum and SIP calculator | Involves monthly investment amount, expected return rate and the tenure. Check out Upstox SIP calculator | Involves total investment, duration of investment and expected return rate.Check out Upstox lumpsum calculator |
Both SIP and lumpsum investments can be very useful tools. However, when you want to invest, how and how much you want to invest will determine which type of investment will work the best for you.
In conclusion, the choice between SIP and lumpsum investment in ELSS (depends on various factors, including an investor's financial goals, risk tolerance, and market conditions. Both SIP and lumpsum have their advantages and drawbacks. Choose wisely to ensure your investment is well guarded from potential losses. Young investors, who often prefer investing small can use SIP as a tool to start practicing mutual funds.
Note: To help plan your trading activities and investment strategies, find here the NSE Holidays 2023, BSE Holidays 2023, MCX Holidays 2023, and Muhurat Trading 2023. Also see here to know more about the stock market timings.
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.
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Upstox Desk
Upstox Desk
Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.
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