SIP-&-Lumpsum Mutual Funds

What is SIP & Lumpsum Investment

 

SIP: Systematic Investment Plan (SIP) is the financial variable wherein the investor invests the decided amount of money at regular intervals. The decided amount is debited from the investor’s mentioned bank account. It is one of the easiest ways for the first-time investor. Also, you can start with as low as INR 500.

Lumpsum: Lumpsum investments are a way where the investor purchases the units altogether. This method makes the best usage of market strategy in the aspect of the timing.

Top 5 SIPs to do in Financial Year 2019

 

SBI Small Cap Fund (G) Direct Plan

Mutual Fund 5 Star

Returns 5Y:  28.83%

Mirae Asset Emerging Bluechip

Mutual Fund 5 Star

Return 5Y: 26.24%

Canara Robeco Emerging Equities

Mutual Fund 5 Star

Return 5Y: 25.92%

Reliance Small Cap Fund (G) - Direct

Return 5Y:  25.87%

ICICI Pru Banking & Fin Serv Fund

Return 5Y: 24.01

  • Past Performance Is No Guarantee of Future Results

Following are the benefits that are considered:

  1. Become Regular and Disciplined Investor: A SIP allows anyone to become a regular investor. Since one saves regularly, it helps them cutting unnecessary expense. Thus, allowing them to become a disciplined investor.
  2. Large Funds are not required:  SIP removes the risk of having a large fund required. One can enter the market by simply investing with a minimum amount of Rs. 500 per month.
  3. Rupee cost averaging: This is one of the most vital parts of SIP investing. A SIP investment allows you to take advantage of rupee cost averaging. Let’s understand the concept. NAV prices fluctuate daily. You will buy more units if the NAV prices are lower and fewer units when the NAV prices are high. Thus, increasing the overall returns of your portfolio.
  4. Hassle Free: Investment is SIP is quiet easy compared to other money market instrument. Apart from that, it allows an investor to increase or decrease the amount of money they have.

Difference Between Lumpsum & SIP Investment in Mutual Funds

 

Planning to invest for a safe and happy future, then prefer looking at a few pointers wherein you can think about taking the best pick for your investment. The real question – What type of investment to choose- Sip vs lump sum mutual funds investment?

  1. For salaried investor, SIP investment is a better option because of her regular cash flow. SIP is known as the discipline of regular investing and can be used for long-term (5 years or more will give you better returns). Still, if you are looking for lumpsum, prefer opting the time when you get money in the form of bonus/increment.
  2.  If you are new to the world of investment and interested in equities, prefer going for SIP route. Being new to this, you might fall into the increase and decrease of market volatilities, thus causing jitters. So, SIP it is.
  3. If you are investing for short-term, let’s say for 3 years for buying a car, then you can go for lumpsum investment in mutual funds, thus giving better returns than SIP.

How SIP & Lumpsum Investment Work in Mutual Funds

Investing in SIP is an easy way for your monthly/quarterly investment. There are two key mechanisms behind the working of SIP.

Compounding Effect or Effect of compounding:

The effect of compounding holds a lot of value, especially in the investing domain. Compared to simple interest, the return investor earns from compounding grow at a geometric rate instead of arithmetic rate. It leads to an exponential growth of money. The value of SIP investment increases as investing time increases.

Rupee cost averaging

Rupee cost averaging gives an extra edge to the investor. It helps them buying more units when the market is down and less units when the market is high.

Lumpsum investment in mutual funds

Lumpsum investment in Mutual Funds is a ONE-TIME Investment of a particular amount in the selected fund chosen by the investor. It can be funds in the debt category or equity category, based on what the goals/expected returns of the investor are.

If you invest a lumpsum amount in a fund of the ‘EQUITY’ Category, make sure the investment is for a long-period of time like 5 years or more and in case of ‘DEBT’ funds, it can be for a short span of time, clearly depending on the goals.

Pros & Cons of SIP & Lumpsum Investment

Pros of SIP:

  1. Investment in the form of SIP is disciplined in its own way; it can be done in the form of monthly or quarterly installments, thus instilling the level of regular investments and savings.
  2.  With SIP as an investment done regularly over a certain time-period helps in beating the market volatility, thus, mitigates risk.
  3. Due to the minimum investment and availability of various payment intervals, the investor can do investment according to her income flow. Thus, the fruits of being flexible.
  4. Setting up the SIP is an easy-going process. After all the basic formalities, the decided amount will be debited from the bank on the selected date. No trouble!

Pros of Lumpsum Investment:

  1. Lumpsum investment is a good option when you have extra cash instead of keeping it idle or in the savings account.
  2. Since the payment has to be made just once, the investor can stay relaxed without worrying about any due dates of the payments.
  3. Lump sum investment in mutual funds is good to go for financial goals like marriage, child’s education, etc. But, if you are looking the investment for short-term, unfortunately, it’s not suitable for the short goals.

Frequently Asked Questions

What is best 5 Lumpsum Investment Option

What is best SIP funds for Investment

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How To Do SIP with Gulaq?

 

Investing in SIP with Gulaq is not a hassle, rather it won’t take much of your time and effort. All you need to do is figure out if you are KYC compliant or not, if not, we have a simple process to deal with. And if your KYC is good to go, look at some of the sip plans according to the returns, goals, risks, horizons, and select the amount you are willing to start with. Tap on the start and the investment is done. That simple!

Investment Ready in 30 Seconds.

Gulaq provides you the simplest and an easiest way to invest. It has no commission, no account fees, no hidden charges as well as you can be investment ready in less than 30 seconds. Our platforms provide the most user-friendly experience.

Attention Investor
Investments in Mutual fund & Securities Market are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund or designing a portfolio that suits your needs. Terms and conditions of the website are applicable.

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Registration Detail 
Estee Advisors Pvt Limited (hereinafter referred to as “EAPL”) is registered with the Securities and Exchange Board of India as Stock Broker with registration number INZ000170130 and registered with BSE Star with code 24408 for mutual fund transaction facility. EFSPL and EAPL are group companies and EAPL is authorized to provide its services to the Users on the Gulaq website/app under a Sub-distribution agreement with EFSPL.

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Mutual fund investments are subject to market risks, read all scheme documents carefully.

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