Investing in stocks doesn’t give immediate results. We invest money expecting it to grow on its own without additional effort. So why not make the initial effort to research and invest in the right assets to get the maximum returns at the lowest risk?

SIPs and lump sums have lower risks than stock trading. But which is better for investing, SIP or lump sum? Find out what the best investment for you is.

SIP (Systematic Investment Plan)

SIP is a method of investing in mutual funds by contributing a fixed amount of money monthly. As stock prices fluctuate every month, they average out the price of your holdings. When markets dip, you will be able to buy more units of the fund at the same price. It requires discipline to invest in the long term and gain returns. These returns will also compound over time.

Benefits of SIP

You can begin investing in SIPs with very small amounts.

You can automate your investments so that even if you forget, your SIP will continue.

You can increase or decrease the monthly SIP amount.

In case of an unexpected financial situation, you can pause the SIP

Unlike stock trading, you don’t have to worry about timing the market.

You can diversify your investments into different types of mutual funds (large-cap, mid-cap, small-cap, ETFs, and debt funds).

Lump Sum

In a lump sum investment, you invest a big amount of money in mutual funds in a single transaction. If you invest at the right time, you have a greater chance of yielding higher returns. But since all your money is invested at once, your returns will depend on the market conditions.

Benefits of Lump Sum Investment

You just have to put effort for once. There are no ongoing contributions.

If you have a huge amount to invest, this will be suitable for you.

If you have invested in the right time, averaging won’t reduce your returns.

Click to know how to calculate your returns before investing and when to choose SIP and Lumpsum