Difference Between SIP and LUMPSUM

Difference Between SIP and LUMPSUM

Difference Between SIP and Lumpsum

When it comes to investing people consider it an additional source of income, so most of the time people ignore
to provide their valuable time to enhance their investment skills.
Before understanding the difference between SIP and Lumpsum, let focus on what both the term means.

Systematic Investment Plan (SIP) :
A systematic investment plan is a process of investment where you make an investment in terms of savings,
it may either on a daily, weekly, or monthly basis. Some of the SIP even start at a price of 500 as well.
For Example: you can invest 500 rs for the first few months, and then switch it to 1000 rs whenever
you like.

Lumpsum:
Lumpsum as the name itself represents it means investing your money at once just similarly to fixed deposits.
For Example: Investing 1 lakh rs in a company for a specified period of time for a specific rate of interest.

 

NatureSIPLUMPSUM
DefinitionSystematic investment plan  investment as per your budget fitsLump-sum Is a onetime investment in like fixed deposit
Cash flowInvestment can be made the system according to your planInvestment has to be made in one-time payment in lump sum amount
FlexibilityHigh compared to a lump sumLow compared to SIP
ProfitHigh compared to a lump sumLow compared to SIP
RiskLower compared to a lump sumHigh compared to  SIP
Cost of investmentLess due to rupee cost  averagingHigh as this is a one-time large investment
Growing marketLess recommendedMore recommended

 

Conclusion:

Although it might not seem much of a difference between SIP and Lumpsum, there is,
the most certain risk is of interest, in both cases, the benefit of interest fluctuation is higher
If you are a salaried person it is better to go for SIP either than Lumpsum.
Mutual Funds investment is subjected to market risk read all documents carefully.

[ Read More: Mutual Fund And Who Are Professional Mutual Fund Advisor? ] [ Read More: Financial Freedom App – Indianmoney.com ]

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