Investment: SIP or Lumpsum... which method is better for investing in mutual funds?

If you want to invest in mutual funds, you can do it in two ways. One is SIP and the other is Lumpsum. In SIP, you invest a fixed amount every month. Whereas in Lumpsum, a lump sum amount is invested. Which method of investment should you choose, which can give you more profit? Know about it here-

SIP

- First, let's talk about SIP because it is a very popular way of investing in mutual funds. The biggest advantage of SIP is that you can invest a fixed amount every month according to your convenience. You can start with Rs 500 as well.

- Another advantage of SIP is that you get flexibility in it, that is, you can increase or decrease the investment in it with time according to your income, you can stop it in between if needed and you can withdraw money anytime.

- The advantage of SIP is that you invest in it amidst all the ups and downs of the market. Due to this your investment remains average.

- Financial experts believe that if you invest money in SIP for a long time and keep increasing the investment little by little as your income increases, and also remain disciplined in terms of investment, then you can create a huge fund through SIP.

- However, the disadvantage of SIP is that you cannot take advantage of any major fall in the market. Apart from this, if you forget any installment of SIP, then you may have to pay a penalty.

Lumpsum

When you invest a lump sum in mutual funds through lump sum. The advantage of lump sum investment is that you can invest by looking at the market situation and take advantage of its fluctuations. You do not have to pay any kind of penalty etc. in this. Although in Lumpsum you do not need to invest continuously on a fixed date, whenever you have a lump sum amount, you can invest it in mutual funds.

But financial experts believe that you should invest in Lumpsum only when you have a large capital and you have a good understanding of the market. A small mistake in this can also cause you loss. But if you are new and you want to get good returns by taking less risk in the market, then SIP can be the best option.

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