SIP vs lumpsum: Rs 15,00,000 investment in 10 years; which can give higher return?
Learn the key differences between SIP and lumpsum investments. Discover which strategy can yield better returns over 10 years with a Rs 15 lakh investment. Plan your financial future effectively.
SIP vs lumpsum: SIP (Systematic Investment Plan) and lumpsum, both approaches cater to different financial goals and investor preferences. SIP allows for regular, disciplined contributions while lumpsum capitalises on immediate market exposure. This article compares the estimated returns of both methods and helps you decide the best strategy for your financial journey.
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
Understanding SIP (Systematic Investment Plan)
SIP is a structured way of investing in mutual funds where fixed amounts are invested periodically, making it ideal for disciplined investors.
How SIP works?
In SIP, funds are debited automatically from your bank account at set intervals and invested in mutual funds. Over time, units are purchased at different rates, averaging costs and maximising returns.
Advantages of SIP investments
SIP offers benefits like rupee cost averaging, disciplined investing, and flexibility to start with small amounts and increase contributions later.
Returns from Rs 15 lakh SIP investment over 10 years
Investing Rs 15 lakh over 10 years through SIP can yield an estimated return of Rs 14,04,238, making the total value Rs 29,04,238.
What is lumpsum Investment?
A lumpsum investment involves depositing a significant one-time amount in mutual funds, allowing it to grow based on market trends and compounding.
How lumpsum works?
Lumpsum investments gain immediate exposure to the market, and the entire amount starts compounding from the day of investment, offering potential for higher growth in a stable market.
Advantages of lumpsum investments
Lumpsum investments are simpler to manage, require less frequent monitoring and can yield higher returns when market conditions are favorable.
Returns from Rs 15 lakh lumpsum investment over 10 years
A lumpsum investment of Rs 15 lakh over 10 years can yield an estimated return of Rs 31,58,772, making the total value Rs 46,58,772.
SIP vs lumpsum: Key differences
SIP involves periodic investments, reducing market risk and promoting consistent savings. Lumpsum requires a one-time investment and is better suited for those with surplus funds and a higher risk appetite.
Which strategy is right for you?
- SIP is ideal for those with limited funds, offering a way to invest regularly and manage market volatility.
- Lumpsum is better for those with a large amount ready to invest, aiming for higher returns in a bullish market.