An investor can invest in mutual funds through SIP or Lump sum investments. But many investors are confused which is better investment. SIP and Lump sum both have their own merits and demerits.
SIP is a systematic way of investing your money in mutual funds. You can invest every month or quarter or year, it depends on the plan you have chosen. It encourages investors to save money and in the end, they can redeem better returns. The main advantage of SIP is that investors don’t have time to keep an eye on market and hence can pour in money into SIP. In SIP, one can also get the benefits of compounding i.e., you can reinvest the interest earned from the SIP. In the long run, it can make a huge positive impact on your returns.
A lump sum amount is a single complete sum of money. In this type of investment, you are investing the total amount at one go before the start of the investment period. This category is referred to as Lump sum mutual fund investment.
Investors should not give much time in taking decision of whether to invest in SIP or lump sum. Whether one opts for SIP or Lump sum depends on whether you have lump sum amount to invest in one go or not. In terms of returns, the higher the investment amount the better is for the investor. The more time you give to the investment, higher the amount accumulated due to effect of compounding.
For more details, please go through the below link:
https://groww.in/blog/sip-vs-lump-sum-how-should-you-invest/
