SIP vs Lump Sum: How to Invest
equity market fluctuations are based on various macroeconomic, geopolitical factors, and even some news can hugely impact stock prices. it is thus almost impossible for an investor to time the market. moreover, emotions often lead to wrong buying decisions which can ultimately lead to wealth erosion. for most retail investors, a mutual fund has proved to be a great instrument through which they can create significant wealth over a long term investment horizon. while investing in mutual funds, investors often come across two choices - either to invest a lump sum or through sip. an investor should have a clear understanding of these two methodologies before putting in their hard-earned money into the equity market.
lumpsum investment refers to on time investment in a particular mutual fund instrument. thus, if one has ₹ 1.2 lac at disposal, an investor can think of buying certain units of a mutual fund with this fund at one go.
sip stands for systematic investment plan. in this case, an investor decides to put a fixed sum of money every month or year and can leverage sip calculator. based on his financial goals and availability of funds over a particular period, he can invest periodically. so, in this case, an investor who is looking to invest ₹ 1.2 lac corpus for one year, can invest ₹ 10,000 each month at some predetermined date of each month.
as market dynamics are difficult to predict, sip offers several benefits over the lumpsum investment strategy. read on to find out the advantages of sip over lump sum:
sips have a lot to offer when you are looking for a disciplined investment path. your goal may be creating a retirement corpus, buying a house or some other asset, or even a vacation. instead of trying to put all eggs in one basket at a time through a lump sum, systematic investments can help you achieve your financial targets despite bumpy stock market fluctuations over the short term. all you need to do is analyze and strategize your investment plans. so leverage cred’s systematic investment plan calculator and find your returns from the sip mutual fund investments.