A lump sum investment involves investing in a mutual fund scheme at one time. Lot of individuals have lumpsum money which they would have got either as a bonus/variable pay, sale of property, inheritance, agricultural income etc. or their source income itself is not consistent. In such cases, investing lumpsum can be a suitable option. However, the selection of mutual fund category/scheme should be done based on when you need the invested money back. Take the help of an advisor or mutual fund distributor to understand whether to invest the lumpsum money as one-time or through Systematic Transfer Plan (STP) route considering the prevailing market conditions while investing.
An SIP (Systematic Investment Plan), on the other hand, allows you to invest a fixed amount of money regularly (usually monthly) in a mutual fund. This method helps reduce the impact of market volatility and averages the cost of investment over time. You accumulate more mutual fund units during a falling market and the market value of your investment grows when the markets go up making it a win-win proposition. For individuals having a regular income like salary or professional income or those who want to achieve their financial goals in a disciplined manner using a financial plan, SIP is the most suitable product. SIPs are ideal for investors looking to build wealth steadily with disciplined investing.
