Lump-Sum vs Sip: If you want to invest in Mutual Fund, then a question must have come to your mind What invest in Mutual Fund through SIP Investment? Or invest in Mutual Fund through Lump Sum Investment?
Today I will tell you whether SIP will be right for you or Lump Sum Investing, but before that, we know in brief what is Sip or Lump Sum. Sip means investing a certain amount in Mutual Funds every month and Lump Sum means investing a lot of money in Mutual Funds at once.
There are 2 different posts written in detail on what is SIP or Lump Sum, which you can read by clicking on the link given below.
Difference Between Sip VS Lump Sum Investing
In SIP, the investor invests in mutual funds every month or three months in a row for several years, and in Lump Sum, the investor invests a huge amount in one go for many years to come.
Units of Mutual Funds are bought every month in SIP, whether the market is up or down, due to which the return from SIP is the average return of the stock market. In Lump Sum, when the market is down and getting it at a cheap price, then it is invested in it, due to which there is a possibility of getting higher returns.
Benefits of Lump Sum Investment
When and at what level to invest in Mutual Fund Lump Sum Investment, it is more important when the market is in a continuous uptrend, then Lump Sum Investment is beneficial.
Lump-Sum Investing gives more benefits of Power of Compounding than SIP, if you want to invest a large amount in the stock market at a time for 10–20 years, then Lump Sum Investment will be right.
Benefits of SIP Investment
SIP is the easiest way to save and you get higher returns when you save through SIP as compared to FD, PPF, RD.
When the market is continuously in a downtrend or sometimes up is in a downtrend then it is beneficial to do SIP because investing in such market through SIP gives the benefit of Rupee Cost Averaging and you can buy more units as compared to Lump Sum.
SIP can be started anytime, it does not have to time the market.
If you want to inculcate the habit of saving and want to invest for less than 4–5 years then Sip Investment will be right for you.
Conclusion:
If you have good knowledge of the stock market and mutual funds and a large amount is lying for investment, then you can earn more profit from Lump Sum investment, but if you do not want to take much risk, you want to invest a small amount every month. If you are happy with the average return then choose Sip.
Lump-Sum or Sip Be it anyway of investing, it is important to choose the right Mutual Fund, if you have invested in a wrong mutual fund, then do SIP or Lump Sum will be a loss, so invest in Mutual Fund with complete research and analysis.
