When is Lump-sum investment better than SIP?
If you want to invest in mutual funds, there are two modes of investment. One is SIP and other is Lump-sum. SIP is generally considered better because it inculcates habit of 'disciplined' investing. But on some occasions Lump-sum might be better than SIP. Let's me show you when. I've compared returns of a tax saver fund over a period of time using both SIP and Lump-sum mode of investment. In below table, one can observe growth of SIP investment and Lump-sum investment over a period of one year. We have considered SIP of ₹5000 per month for SIP and one time investment of ₹60,000 per year for Lump-sum investment. We observe that SIP investment of ₹60,000 grows to be ₹61055 at end of the year. But Lump-sum investment value changes according to time of investment. While lump-sum investments made early in a financial year fetches better returns than SIP, investments made after November gives less returns than SIP which is going on throughout ...