Rs 10,000 SIP vs Rs 12 Lakh Lump Sum: Which can create higher corpus in 10-year investment time frame? See details
Rs 10,000 SIP vs Rs 12 lakh Lump Sum: Investors with a large sum can invest in a mutual fund through lump sum, while those with fixed savings every month can invest through a systematic investment plan (SIP). Both get the benefit of compound returns.
Rs 10,000 SIP vs Rs 12 lakh Lump Sum: In mutual fund investment, investors can invest through the lump sum method or systematic investment plan (SIP). While in a lump sum, investors can park their large amount in one go; SIP allows them to have a fixed amount of investment every investment cycle. Both provide the benefit of compound growth, where investments grow faster with time. Know how SIP and lump sum investments in mutual funds work, and which of the two—Rs 10,000 monthly SIP investment or Rs 12 lakh lump sum investment—can generate higher capital gains in 10 years.
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(Disclaimer: These are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is lump sum investment?
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When is right time to start lump sum investment?
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Unlike SIP, which can be started in any market condition, an investor needs to do proper market research before making a lump sum investment. It is considered that the lump sum investment should not be made when the market is high. But it is not easy to gauge whether the market will rise or fall from that point. So the lump sum investment can be made for a long term so that it absorbs market shocks easily.
What is minimum lump sum investment in mutual funds?
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When is right time to withdraw lump sum investment?
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Compound growth of lump sum investment
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What is SIP investment?
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What are different types of SIPs?
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What are minimum and maximum SIP amounts?
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What's the maximum duration for SIP investment?
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Can SIP return be negative?
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Though one doesn't need to time market in an SIP investment and investors also get the benefit of rupee cost averaging, SIP returns can be negative. E.g., if someone starts their investment in a falling market and the market is slipping for a long time, the investor may get negative SIP returns, but the SIP investment is most likely to be positive in an investment horizon of 7-10 years.
Story calculations
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Return from Rs 10,000 monthly SIP investment in 10 years
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Return from Rs 12 lakh lump sum investment in 10 years
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