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Avoid Lump Sum Investments

SIPs win over lump sums because they help you accumulate savings as well as manage your anxieties

My first question is if it is wise to invest in a lump sum amount when the markets go down? The other question is how to apply for the NPS scheme launched by the government?
-Abhishek

To answer your first question, investing via lump sums in falling markets doesn’t make sense. The biggest advantage of investing via SIPs is that if you invest Rs 5,000 every month and check the value, you will be happy that the saving was accumulated because of investing. You won't be bothered by the fall in the markets. But when you invest in a lump sum, say for example, you invest Rs 1 lakh and it drops down to become Rs 90,000, then it becomes very difficult for you to keep investing. You feel pressurized to believe that maybe you haven’t taken the right decision.

Regular investing is not a guaranteed way of earning profits, but it is a way of managing your anxiety. If you want to invest a big amount like Rs 1 lakh, for example, then spread it over 2-3 months so that you can reduce the risk of a mis-timed investment in a high market.

Regarding the NPS, it has many points of purchase. You can view the addresses on www.pfrda.org and open an account from the nearest point of purchase.



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