Diwali falls on Sunday, 8 November 2026, as listed in India Post's holiday calendar and Economic Times' November calendar. If a bonus arrives around the festival, deciding what it should do is more useful than chasing the largest projected return. The same money cannot simultaneously remain available for emergencies, be fully invested and reduce a loan balance.
Here we compare a ₹1,00,000 bonus in three ways: invest it immediately, spread it over a 12-month SIP, or make a part-prepayment on a home loan. The investment return is an assumed 12%, not an expected return for any named fund. The loan is an illustrative ₹30 lakh borrowing at 8.5% over 20 years, not a current bank offer.
Set aside money that already has a job
Work with the bonus actually available after deductions and planned spending. If some of it is already needed for an annual bill, a medical expense or festive purchases, it is not all investable surplus. The ₹1 lakh here is the amount remaining for comparison after those decisions, not a claim about anyone's gross bonus entitlement.
A household without accessible savings may need to retain cash before choosing any of these paths. That is a liquidity decision rather than a failure to maximise returns. There is little benefit in committing the entire bonus and then borrowing again to meet a predictable expense.
Use the same clock for lump sum and SIP
Both investment scenarios are measured at the end of 12 months. The lump sum goes in at the start. The SIP divides the same ₹1 lakh into 12 equal contributions, each made at the beginning of its month. Uninvested cash is assumed to earn nothing; fees and taxes are excluded.
The SIP engine interprets 12% as a nominal annual rate divided across months. To keep the comparison consistent, the lump-sum engine also uses monthly compounding. This produces a different value from entering 12% with annual compounding. A calculator comparison is only meaningful when those conventions are visible.
| Use of bonus | Total invested | Modelled end value | Modelled gain |
|---|---|---|---|
| All invested immediately | ₹1,00,000 | ₹1,12,683 | ₹12,683 |
| 12 equal beginning-of-month contributions | ₹1,00,000 | ₹1,06,744 | ₹6,744 |
These figures come directly from calcLumpSum and calcSIP. For comparison, choosing annual compounding for the lump sum gives ₹1,12,000 after one year. That difference is a modelling convention, not evidence that one investment product offers an extra return.
The model uses exactly ₹1,00,000 divided by 12 internally. An actual payment instruction requires rounding, so the final contribution should reconcile the total bonus used. Do not round the monthly input and then quietly claim that the contribution total is unchanged.
What the larger lump-sum number means
In a smooth positive-return model, money invested earlier grows for longer. The lump sum gets the full period; the later SIP instalments do not. That explains the gap without needing a claim about market timing. The result follows from the assumptions, not from predicting what markets will do after Diwali.
Immediate investment may fit someone whose emergency reserve is in place, whose goal allows market risk and who can tolerate a fall soon after investing. The lump sum investment calculator lets you change the assumed return and duration. Treat the output as a scenario, especially when the money is needed at a fixed date.
A mutual fund lumpsum investment calculator cannot tell you the future return of a fund. Even if a long-term plan uses an optimistic assumption, a short holding period can end with less than the amount invested. This article names no fund or security and offers no purchase recommendation.
What spreading the bonus can and cannot do
A monthly SIP calculator is helpful when you want to commit a finite pool gradually. Spreading the entry dates can make the decision easier to follow emotionally: you do not have to choose one day for the whole amount. It does not remove market risk or guarantee a better purchase price.
Decide in advance where the uninvested part will remain and how the monthly transfer will happen. If those funds are gradually spent instead, the original comparison no longer applies. The model assumes every contribution is made and that the money still waiting to be invested remains intact.
Someone who would otherwise abandon the plan after a short-term decline may prefer gradual contributions for that behavioural reason. Someone comfortable investing at once may see little value in delaying exposure. A SIP-versus-lumpsum return comparison should make this trade-off explicit rather than label either method universally better.
Prepaying the home loan in year three
"Year three" needs an exact point in the schedule. Here it means immediately after 24 regular EMIs, at the start of the third loan year. The site's amortisation function calculates an outstanding balance of ₹28,75,309, with 216 months remaining on the original schedule.
We then pass that balance to calcLoanPrepayment, keep the rate at 8.5%, and apply the ₹1 lakh bonus. Under the reduce-tenure option, the EMI stays approximately ₹26,035. Remaining tenure becomes 200 months, saving 16 months and an estimated ₹3,34,330 of future interest.
The engine accounts for a partial final instalment. It assumes the rate never changes and excludes prepayment charges, tax effects and any later extra payments. For a floating loan, future savings will change if the rate changes. Enter the bank's actual outstanding balance rather than the original sanctioned amount.
If monthly breathing room is the priority, choose reduce EMI instead. In the same example, the engine gives a revised EMI of ₹25,129, with the remaining term unchanged and estimated interest savings of ₹95,579. This is a different objective from finishing the loan sooner.
Do not compare lifetime interest savings with one-year growth
The prepayment saving accumulates over the remaining loan schedule. It is not cash earned during the next 12 months, and it is not an investment maturity balance. Comparing it directly with the one-year SIP gain would mix two different clocks and two different kinds of benefit.
A full wealth comparison would need a common end date, future rates, taxes, costs and assumptions about investing the EMIs freed after early repayment. Those additional choices can dominate the result. This limited example instead shows what each action does to cash flow and debt, with its measurement period clearly stated.
The home loan prepayment calculator helps compare tenure reduction versus EMI reduction. RBI's reset guidance recognises repayment choices, but applicable charges and processing details must be checked with the lender. Ask for confirmation that the money will reduce principal and for the revised schedule afterwards.
Match the choice to the household
Prepayment may fit someone who values reducing debt and has enough liquid savings left afterwards. Gradual investment may fit a person with a suitable investment horizon who wants to spread entry dates. A lump sum may fit someone comfortable committing the available investment amount immediately. None is automatically right merely because a bonus arrived.
You can also split the bonus after identifying a cash reserve and a clear purpose for each part. Use the SIP calculator and the other tools with the actual amounts allocated, rather than applying the full bonus to every option and mentally adding the benefits together.
For the broader discussion, see home-loan prepayment versus SIP. Educational information only; not financial advice. The investment rates are assumptions, no returns are guaranteed, and no particular security is recommended.