Lumpsum vs SIP .Which one is better?
| Topic | Lump Sum Investments | Systematic Investment Plans (SIPs) |
|---|---|---|
| Strategy | Invest a large sum upfront | Invest a fixed amount at regular intervals |
| Market Timing Risk | Exposure to market timing risk | Mitigates market timing risk through rupee cost averaging |
| Risk Management | Requires specific risk management strategies | Built-in risk management through regular investing |
| Psychological Factors | Emotional responses due to large investments | Promotes disciplined investing, reduces emotional decisions |
| Potential for Higher Returns | Potential for higher returns in rising markets | Smoother returns over time due to rupee cost averaging |
| Entry Barrier | Requires a significant capital upfront | Lower entry barrier, suitable for smaller investments |
| Tax Implications | Tax implications depend on investment vehicle | Tax implications depend on investment vehicle |
| Investment Vehicles | Stocks, mutual funds, bonds, ETFs, etc. | Typically mutual funds, but can include other options |
| Long-Term vs. Short-Term Investing | Suitable for long-term goals, higher risk tolerance | Suitable for various goals, promotes disciplined investing |
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