What is SIP?
SIP (Systematic Investment Plan) is a type of investing option in mutual funds. The investor invests a fixed amount of money in mutual funds every month and it can be automated to invest in mutual funds from debited from your bank account. According to Sip vs Lumpsum, SIP helps you build discipline in the stock market to invest regularly.
What is Lumpsum?
Lumpsum is another mode of Investment to invest in mutual funds. It is a One-time investment in mutual funds and requires a huge money to invest compared to SIP. You need to do some analysis in the market to invest the lumpsum money. You can earn huge profits in lumpsum investment when the market performs well.
SIP Vs Lumpsum
Both SIP and Lumpsum are best for investing. SIP has more advantages and benefits compared to a lump sum. You can start an SIP with 500 rupees but, lumpsum requires a minimum of 1,000 rupees to invest.
SIP Vs Lumpsum Benefits
SIP helps you avoid a huge loss in investment because the concept of Rupee Cost Averaging is by you can buy more units in mutual funds before they blow up.
Lumpsum investment can make a huge profit in the short term of the period when the market performs well when you invest a lump sum of money. But, it requires some stock market knowledge to analyse the market condition to invest.
Best For You
Overall SIP Vs Lumpsum, SIP is best for me.
Because I’m not an expert in the stock market to find a good time to invest a lumpsum amount of money. SIP helps me to build discipline over a while.
SIP reduces the risk of investment in the long term and the investment earned in SIP is reinvested in its compound effects helping us to make huge growth in long-term investment.
Lumpsum is best when you have the financial and stock market knowledge and you don’t care about your money when it doesn’t perform well. You need a huge money without any responsibilities for the money to invest in lumpsum.
The Choice between SIP Vs Lumpsum is yours on the preference of risk management, Financial Goals and you should consider the investment objectives, your financial situation, and market condition(for lumpsum) before you choose SIP Vs Lumpsum to invest.
Conclusion
In the end, Both SIP Vs Lumpsum investment option has their benefits and drawbacks. Investors should consult with a financial advisor before the investment to determine the most suitable investments good for them.
