Investing in mutual funds is the most preferred way of investment in our country. Many individuals find it an attractive way to make wealth. Mostly the investment were done in SIP or Lump sum mode. However, individuals often confuses in making the correct choice between the two. "Systematic Investment Plan (SIP)" and a "Lump sum investment". Both are the methods of investing in the same financial instruments like mutual funds, bonds ETF. Many experts on social media always suggest for SIP. But the question keep lingering, which is better? Which offers higher returns and lower risk?
Systematic Investment Plan, involves depositing small amounts of money each month. Whereas, a lump sum involves investing a large sum of money all at once. But both have key differences in execution, risk, and suitability for different financial situations. SIPs inculcate the habit of regular savings. It's a disciplined investment methods. Lumpsums, on the other hand, are suitable for those with a larger corpus, but they carry a higher risk of market timing. In last few years, I have analyzed certain points and helped few of my family member in choosing the right option. To calculate which one of them gives a higher returns I made use of online calculator by SBI securities from one of the renowned mutual fund service provider. The result really is surprising and may be an eye opener for many.
Lumpsum Calculation : Investment Amount – Rs 1,20,000, Timeframe – 10 years, Minimum Return – 12%
SIP Calculation : Investment Amount – Rs 1,000 per month (which took my total investment equivalent to the Lump sum amount), Timeframe – 120 months (10 years), Minimum Return – 12%
 |  |
|---|---|
| SIP Calculation | Lump Sum Calculation |
I have assumed a 12% return for my calculations. This return may vary depending on stock market fluctuations. This has been minimum return in last few years.
The Lump sum investment gives me an extra Rs.1,40,363/- which is a far better return as compared to monthly SIP. Ever since I came into earning, I was always asked to make SIP. But It is a myth that SIPs always win. Statistics show that over 10-15 years, the average return for a lump sum investment is 12-14%, compared to 10-12% for a monthly SIP. The difference is that lump sums carry more risk, while SIPs balance the risk.
To make a choice between the two depends upon the individuals appetite of risks. Market volatility is beneficial for SIPs. They offer more units at a lower price, reducing average costs. The risk with lump sum investments is that if the investment is timed incorrectly, losses can be significant. The best time for a lump sum investment is generally considered to be during a market correction or downturn, when asset prices are undervalued, allowing us to buy more units at a lower price at once.
If we can have monthly savings, SIP is the best option. It builds wealth gradually and reduces risk. Lumpsum is ideal when we have a large corpus and the market is low. Experts say that while lumpsum can offer higher returns at the right time, SIPs are a safer and more balanced option over the long term. This is why more and more individuals were pitching into SIP mode of investment.
In good faith - Peace!!
Mutual funds is a very good strategy
Lump sum investment have higher returns but for someone that receives monthly income, I think SIP would be better
Yes...SIP keeps u in discpline...which helpsmu to build a good corpus
Bhai, basically it's on how much one is willing to work on the investment plan agar jayda jikhjikh nahi chahiye to SIP, nahi to thoda planing and execution kar ke Lumpsum time to time dalte rahne se aache returns milenge.
Baat wahi ki paise chahiye to effort ka hona aur risk tolerance hona chahiye. Warna safe SIP kar ke baaki kaam par dhyan do.
♥️☮️
ha ye sab bhe depand krta hai ke aap kaha investment krte hai 😅. ye sab to ek ideal conditions ho gye.
Bhai...kaha ka option thik rahega
HBD 15 % abhe tak to best hai.
!PIZZA
Oye...hoye ...kitne zama karwa liye hai
Naa bhai, Abhi risk factor thoda lag raha hain.
SIP keep u in discipline...which is more important....lump sum u might need to take special time for it.
I do a little bit of both to be honest. There is a max limit you can invest through the year anyway, so that kind of puts a damper on things, but I am usually quite a bit below it. I definitely agree it feels like you are aiming at a moving target with the lump sum method.
When i was working in had few SIP and it went well ..it gives a disciple approachbto saving....now it try to invest lumpsum as and when get some cash in hand...
I do most everything via SIP. It just makes sense and once you get used to it, you don't even miss the money. My employer does a single lump sum investment for me each year as part of my contract.
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Namaste🙏 Bro, I lost around ₹3 lakhs in the share market back in 2013. So i completely away from share market. But in the last two years, I re-entered the share market through SIP. Again wahi chul I tried investing directly in shares and i faced losses of 15k. Finally😞learned that SIPs through mutual funds are the best and safest way for me to stay connected to share market. So i am doing SIP of ₹1,000 and another of ₹500 and HAPPY😀 hu no share me dimag lagane ka problem aur share hai bhi mutual fund ke name pe😀 !INDEED !PIZZA !LADY
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