A lump sum: all at once, or in parts?
You have money in a bank account and you want it invested. Here is what about twenty years of Indian index data says about going in all at once or in monthly parts, and what it cannot tell you.
In short
- All at once won a little more often. After five years it was ahead of six monthly parts in 56.8% of start months on the Nifty 50 and 59.6% on the Nifty Smallcap 250, with the waiting money earning 6%.
- In parts won when the market fell soon after the start. When the index was lower six months on, in parts came out ahead 80% of the time on the Nifty 50 and 84% on the Smallcap 250.
- Time matters more than the entry. The Nifty 50 was below cost a year after 24.0% of start months, and five years after only 1.2%.
What was measured
Take two people with the same money, on every month-end since Sep 2007 for the Nifty 50 and Apr 2005 for the Nifty Smallcap 250. One invests it all that day. The other invests it in equal monthly parts, and the money still waiting earns a stated rate: 0% if it sits idle, or 6% a year if it sits somewhere that pays. Both are valued five years after the start.
| After five years | Nifty 50 | Smallcap 250 |
|---|---|---|
| Start months measured | 169 | 198 |
| All at once ahead of 6 parts, waiting money at 0% | 62.7% | 63.1% |
| All at once ahead of 6 parts, waiting money at 6% | 56.8% | 59.6% |
| All at once ahead of 12 parts, waiting money at 6% | 57.4% | 55.6% |
| The middle result for all at once, against 6 parts at 6%, in points of the starting amount | +2.0 | +2.8 |
| Parts ahead, when the index was lower six months on (at 6%) | 80% | 84% |
| Below cost: all at once | 1.2% | 11.1% |
| Below cost: 6 parts | 0.0% | 8.6% |
| Worst start, all at once | −4.8% | −32.0% |
| Worst start, 6 parts at 6% | 4.5% | −24.8% |
Markets rise more often than they fall, so money that goes in earlier usually has longer to grow. That is all the first rows say. The gap is not large: in the middle case on the Nifty 50 it was about ₹20,000 on ₹10 lakh over five years, before tax. Waiting twelve months instead of six nearly doubled it, to about ₹36,000.
What the first year can look like
Whichever way you go in, this is the part that tests people.
| From any month-end | Nifty 50 | Smallcap 250 |
|---|---|---|
| First 12 months: the worst | −52.2% | −69.1% |
| First 12 months: the share of starts that were down | 24.0% | 37.4% |
| First 12 months: the middle result | 9.9% | 8.9% |
| Any five years, a year: the lowest | −1.0% | −7.4% |
| Any five years, a year: the middle | 11.7% | 12.6% |
| Any five years, a year: the highest | 22.3% | 36.6% |
| Deepest fall on any day | −59.9% | −76.0% |
Five years is not a guarantee: the Smallcap 250 was still below cost after five years for 11.1% of its start months. But it is why money with a date on it, like a home or fees in the next few years, does not belong in shares however you go in.
Why this is not the whole answer
The tables count rupees. They do not count what happens to you. If ₹10 lakh goes in on Monday and reads ₹8 lakh by Christmas, most people judge the whole idea by that number, and some sell at the bottom. A plan you can keep beats a plan that wins on paper. Going in parts costs a little on average, and buys fewer days of that feeling.
Other markets show the same shape. Vanguard’s study of US markets found a lump sum ahead of averaging in over twelve months about two-thirds of the time, with averaging in doing better in the worst years.
If you go in parts
- Decide the parts and the dates now, and write them down. The plan is harder to keep once the market has moved.
- Keep the waiting money where it cannot fall: a savings account, a deposit or a liquid fund.
- Keep going if the market falls. Those are the parts that the extra caution was for.
Month-end closing prices of the Nifty 50 and the Nifty Smallcap 250 from Yahoo Finance, to Sep 2026. These are price indices: no dividends, no costs and no tax. Leaving dividends out slightly understates all at once, which has more of its money invested earlier. The 6% is an assumption, before tax. An index is not a fund or a portfolio. Past results do not tell you future ones. General information, not advice on your money.