Got a bonus or a payout?
Invest it all today, or spread it out?
- All at once or month by month, side by side
- In a steady market
- And one that falls right after you start
- All at once
- ₹15.17 L
- Spread over 12 mo
- ₹14.57 L
Your money, both ways
In a steady market. Value before tax on selling.
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What this means
- In a steady market, all at once is ahead by ₹59.9K: the money is invested for longer.
Why?
While it waits, the money earns the liquid fund's 6.5%, taxed at your slab, instead of equity's 12%.
- If markets fall 20% right after, spreading is ahead by ₹1.74 L: later instalments buy cheaper.
Why?
Both markets grow to the same total over 10 years; only the order of the years differs. Nobody knows in advance which one you'll get.
- Spreading buys peace of mind, not extra return. It limits how much a bad start can hurt, and costs a little when markets rise.
- Tax on the gains is about ₹1.33 L all at once and ₹1.22 L spread, already taken off above.
Why?
Equity gains held a year or more pay 12.5% above ₹1.25 L a year. The part of the money that waited in the liquid fund pays tax at your slab on its interest instead, and that is built into its 6.5%.
More details
Both markets, after tax in 2036
- All at onceMore₹15.17 L
- Spread out₹14.57 L
- All at once₹15.17 L
- Spread outMore₹16.91 L
Tax if you sell it all
- All at once ₹16.5 L before tax₹1.33 L tax · you keep ₹15.17 L
- Spread over 12 mo ₹15.79 L before tax₹1.22 L tax · you keep ₹14.57 L
Tax on the equity gains if sold in 2036, long-term. Interest from the liquid fund is already taxed at your slab.
How it's calculated
- All at once: the whole amount goes into the equity fund today.
- Spread out: the money waits in a liquid fund and moves across in equal parts each month, like a systematic transfer plan (STP). The liquid fund's return is taxed at your slab plus cess.
- The two markets grow by exactly the same total over your period. The steady one earns your return every year; the other falls 20% in the first year, stays flat in the second, then earns more to catch up. Only the order changes.
At the end, equity gains above ₹1.25 lakh pay 12.5% long-term capital gains tax plus cess. The period is at least a year past the last instalment, so every unit counts as long-term.
Tax if you sell (equity funds). Units held a year or more pay 12.5% on gains above ₹1.25 L a year; units held under a year pay 20%. Both add 4% cess.
Tax = max(0, gain − ₹1.25 L) × 12.5% × 1.04
You keep = value − tax
After-tax return = (you keep ÷ put in)1/years − 1
Tax figures follow Budget 2025 rules, for FY 2025-26 onward.