Best way to invest in Mutual fund through SIP or lumpsum

1. Best way to invest in Mutual fund through SIP orlumpsum • Mutual Funds are the crowd favorites these days. And rightly so. Irrespective of your risk appetite, investment horizon, or financial goals – there is a mutual fund scheme for you. Some schemes (ELSS) also offer you a twin set of benefits – capital appreciation as well as tax savings. However, the question remains – what is the best way to invest in Mutual Fund? Read on to figureout. • Ways to Invest in MutualFunds • There are two ways to invest inMutualFunds: • A one-time payment is known aslumpsum • Regular periodic investments known as Systematic InvestmentPlans • If you are wondering which route should you take, here are some pointers which will help you make the decision. • Risk • We all know that to earn more returns, we need to take some risks. While risk is inherent in all investments, SIP helps to spread it across different marketcycles. • Timing your investmentdecisions • Many investors follow the investment principle – buy at the bottom and sell at the peak. If you are going with lump-sum investments, you need to ensure that the timing is “just right”. This would need you to constantly monitor the market, analyze and forecast. All these activities are time-consuming, require in-depth market knowledge and honestly can be intimidating for many investors, especially the beginners. • SIPs, on the other hand, get rid of this requirement. In fact, it deters investors to back out from their investments in case ofdowntime. • Debutantinvestors • SIPs are the perfect stepping stone to equity investments. They allow new or novice investors to get equity exposure without a high investment. You can start off with even Rs. 500 SIPs to get an understanding of the working of the market. Gradually you can increase your contribution or go for relatively riskier schemes if they are in line with your financialgoals. • Flexibility • SIPs help to inculcate a sense of financial discipline by ensuring you invest on a regular basis. They also allow investors to increase (or stop or decrease) the investment amount basis unforeseen circumstances. For instance, you can opt to increase your SIP contribution every year basis your salary increments. This will ensure your corpus is not impacted by inflationarypressures. • Rupee CostAveraging • We know that SIPs enable you to invest at different points in the market cycle. A critical advantage of this phenomena is rupee cost averaging. During a bearish market, you end up with more number of units. Hence, it averages out the per-unit purchasingcost.

2. FinalWords Lump-sum investments are not a bad choice. For instance, if you get a sudden windfall or receive your bonus, you can invest them in one shot in Mutual Funds so as to save yourself from frivolous spending. However, there are certain pre-requisites with one-time investments such as the availability of a large sum of money and market knowledge to time your investment. If the markets keep on rising consistently, lumpsum mutual fund investments can be more rewarding. However, we all know what goes up, will come down. SIPsare a more lucrative choice in times of volatility. Moreover, SIPs are for everyone. They make mutual funds accessible to all kinds of investors. Irrespective of the route you decide to take, you need a good platform to invest in Mutual Funds. So, why wait and getlate?