Investing at once ends with more when the market rises steadily: 236,058 after 10 years, against 228,894 when the same 120,000 goes in over the first 12 months. Spreading it out ends with more on only one of the four paths here, the one where prices fall first, while the money is still going in. There it ends at 252,897.
All four paths end with the same overall return, an assumed 7% a year across the 10 years, so the lump sum ends at 236,058 on every one. Only the timing of the rises and falls differs, and that decides how the monthly parts do: each part buys at its month’s prices, and money waiting to go in earns nothing in this example.
Four paths to the same overall return
The same 120,000 in every row:
| How the market moves | All at once | Over 12 months | Ends with more |
|---|---|---|---|
| Rises steadily | 236,058 | 228,894 | All at once |
| Falls first, then recovers | 236,058 | 252,897 | Over 12 months |
| Rises, then falls near the end | 236,058 | 223,028 | All at once |
| Swings up and down | 236,058 | 225,570 | All at once |
What the example leaves out
Real markets do not follow a chosen path, and which one is coming is not known in advance. The 7% is an assumption, not a forecast, and fees and taxes are left out. Investing in fixed monthly parts is called a SIP (systematic investment plan) in India.