Financial Nirvanaby Pradeep Rawal
Learning game

The Rupee-Cost Averaging Lab

Pick a market shape, or real NIFTY 50 history, and compare three investors: a monthly SIP, a lumpsum at the start, and a saver who waits for dips. Change the choppiness and see who wins, and why.

SIP: average cost per unit
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Average price over the period
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SIP return (XIRR)
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Price and your SIP's average cost

What each approach is worth

What this lab teaches

Rupee-cost averaging means investing the same amount at regular intervals, as a SIP does. Because a fixed amount buys more units when prices are low and fewer when they are high, the average cost per unit is always at or below the simple average of the prices you paid.

Example: invest ₹10,000 a month at prices of 100, 80, 50, 80, 100. The average price is 82.00, but you buy 650.0 units for ₹50,000, an average cost of 76.92. Mathematically, the SIP's average cost is the harmonic mean of the prices, which is never above the ordinary average.

What the market shapes show

  • Steady rise: investing everything at the start (lumpsum) wins, because every rupee is invested for longer in a rising market. A SIP still does well, just less.
  • Crash and slow recovery: the SIP shines. When prices fall hard and take years to climb back to the old level, the lumpsum barely breaks even, while the SIP has bought many cheap units during the fall that rise the most in the recovery.
  • Sideways: closer to a coin toss than most people expect. The SIP's average cost is still below the average price, but whether it beats the lumpsum depends on whether prices spent more time below or above the starting level. Choppiness helps the SIP: in our simulations of this shape it finished ahead a little more than half the time in calm markets, and about three times in four when monthly swings were large. Try the slider.
  • Long slump: everything is painful for years, but the SIP's low average cost means it recovers much sooner than the lumpsum.

The "wait for a dip" saver keeps the monthly amount in cash (at 0.5% a month) and invests everything only when the price is 10% or more below its latest high. Whether that wins depends entirely on the dips. When deep falls arrive regularly it can come out ahead, because it buys a lot at once near the lows; in a steadily rising market it may sit in cash for years and fall behind. Nobody knows in advance which kind of market is coming.

The real NIFTY 50 result

Investing ₹10,000 at every month-end from February 2019, a total of ₹9,20,000, would have grown to ₹12,41,713 by October 2026, an XIRR of 7.7% (price index, before costs and dividends). Investing the same total at the start would have reached ₹19,22,751, a 10.1% annual return on money that was all invested from day one. The dip-waiter, which found a 10% dip in 9 of the 92 months, ended with ₹13,58,830, ahead of the SIP: this period had several sharp falls, including the 2020 crash. The lumpsum and the SIP are not directly comparable, because the lumpsum needs the whole amount up front. For most people, who earn monthly, the SIP is simply how investing happens. Our NIFTY 50 SIP study explores this period in depth.

Frequently asked questions

Does a SIP always beat a lumpsum?

No. In markets that mostly rise, investing a lump sum early usually ends ahead, because the money is invested for longer. A SIP does better when prices fall or swing before rising, and it suits people who invest from monthly income.

Why is a SIP's average cost lower than the average price?

A fixed amount buys more units when the price is low. That weights the low prices more heavily, so the average cost per unit (the harmonic mean of the prices) is at or below their simple average.

What is XIRR?

The annualised return that accounts for the timing of each instalment. It is the standard way to measure SIP returns, and mutual fund statements report it.

This game uses simulated prices and random outcomes for learning. It is not a trading platform, uses no real money and does not predict real markets. Everything runs in your browser; nothing you enter is sent to us. Read our disclaimer. Built and checked by Pradeep Rawal.