SIP vs Lump Sum Investments
SIP vs Lump Sum Investments
At the outset, there is a difference between the cash flows – in case of lump sum investing, the investor has money on hand that can be invested. Whereas in case of SIP, the investor may not have lump sum on hand and may have regular surplus expected in future.
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SIP vs Lump Sum Investments
1. SIP: Under Systematic Investment Plans (SIPs), the investor invests a specific sum of money at regular intervals. This specific amount is directly deducted from the investor’s bank account. It disregards the timing of the market.
Advantages of SIP are:
• Investment discipline
• Mitigation of risk
• Flexibility
• Hassle free
2. Lump Sum: These investments allow the investor to purchase the number of units he wants at one go. This method is usually chosen to create extra wealth and liquidity. Lump sum method makes use of the timing of the market strategy.
Advantages of Lump Sum are:
• Investment of big amount
• Ideal for long-term
• Convenient one time payment
SIP vs Lump Sum Investments
