Lumpsum vs SIP - which should you choose?

[{"selector":"#anim-c68e618b-1cef-4ad6-a4a6-23f865a5f782","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-e0a0d97c-7c32-4544-8af9-fc5286d79563","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] By: Value Research

Both methods of investment have their unique advantages. Let's explore.

[{"selector":"#anim-813362e1-833b-40b3-9c0f-6a745786f033","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7679a7ce-d4d9-498b-a01b-fee057efbd12","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}]

First things first

[{"selector":"#anim-44e35461-5b03-47c1-af07-e05537a20a5b","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c91b0f5f-3ac0-439d-9cbe-cb52981ad1dd","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-44bd1d20-692c-4a73-af27-3c85d5f07fd4","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d375b317-9156-4d87-b94c-5fcbefbda259","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Never invest lumpsum in equity.

Risk

[{"selector":"#anim-c7ef071f-e8fe-4d13-8de6-4ab6373a7dae","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-759611c5-2589-4bd4-971a-06b850f3deb5","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-bc817b05-1ded-48f5-ab5c-1fbf0df2735c","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c8a83e93-2fa3-4a98-a1c5-4032844d7d07","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] By investing a lumpsum, you run the risk of investing at a market high, while SIPs reduce the risk of investing at a market high.

Regularity

[{"selector":"#anim-61f4baec-d0c9-4b8e-ac3f-d42e303061e2","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-121fa2c6-acd9-4519-baba-8cf1b9c1a6f8","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-219fe2c2-d967-49e9-b3b3-851a5fae471f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a1422264-7c7f-40df-ad25-18746a5501e4","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] SIPs also instil the discipline of investing regularly. You earn every month, spend every month and therefore invest every month.

Overcoming market volatility

[{"selector":"#anim-1a4a1f19-f443-45da-bf43-1807f7efd619","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8b230768-94a3-451d-8719-946df201a13a","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-cd3b4e96-46ef-4338-b3e1-3f9aa9922d3b","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-ffc021f0-8393-4810-8887-c661b14ae726","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Investing in lumpsum needs you to time the market, which is never an accurate science. On the other hand, you can enter the market at any time through SIP.

[{"selector":"#anim-cb4660c3-2ed5-442a-978b-597feb580dd6","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-eaf16ebe-1832-4b7b-a71f-d7349119d809","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9069ff49-6c29-4178-a069-3dd9e4274aa8","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-1bb32113-7da6-4941-b474-e8bc7d6ce57c","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] You can start investing with as low as Rs 500 or Rs 1,000 in an SIP.

Averages out cost of investment

[{"selector":"#anim-47833a89-5aa5-483b-b49b-241eec174ef5","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-475f093c-3321-4fda-a2d6-90fe0f66b21a","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-252046fe-b69e-42be-b456-cae53df03c46","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-efef2119-3c9b-4dba-a046-8f26a5ad2b6c","keyframes":{"transform":["translate3d(-114.45784%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Lumpsum investment is a one-time transaction, so the cost per unit, is not averaged out. On the other hand, in SIP, it is averaged out.

Other Webstories

[{"selector":"#anim-15ca2a5c-d223-408b-bf4c-e0c2666f30c9","keyframes":{"opacity":[0,1]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-60d2a2a6-72fc-4ffd-b96b-0db8e6ab8e13","keyframes":{"transform":["translate3d(-125.51724%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-e112bb03-820c-443f-b538-62e9f9a0b7bf","keyframes":{"opacity":[0,1]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9b1e3862-d1f8-4b92-a670-4e7328d8b659","keyframes":{"opacity":[0,1]},"delay":400,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a3344c57-4744-4909-8004-6df7642d483a","keyframes":{"transform":["translate3d(-194.52735%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-896d6180-0b62-41f8-b040-fbc64be1b21b","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-46f84d25-9d53-44b9-b35e-62363a5085e4","keyframes":{"transform":["translate3d(-125.51724%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Click Here