What is the difference between a Lumpsum investment and an SIP?
When you choose to invest in Mutual funds, you may have to decide whether you would do it one time, or at regular intervals. An investment that is made just one-time is called a “Lumpsum” investment. When you decide to invest regularly, for instance, every month, you do it via an SIP – a Systematic Investment Plan. When you opt for an SIP, the amount will be deducted from your account at the intervals you have chosen – monthly, quarterly, etc. – and will be invested in the fund. An SIP is generally recommended for disciplined investing and to better handle volatilities in stock markets. It must be noted that after you make a lumpsum investment if in the future you want to invest more in the same fund/folio, you can do that easily, subject to the minimum amounts specified by the AMC. Generally, SIPs have smaller minimum investment amount requirements than lumpsum.