Choosing the right mutual fund plan can secure your future financially. However, one of the most common dilemmas investors face is selecting the right strategy to kick-start their investment journey. Most investors are usually confused between the two mutual fund investment methods- SIP and Lumpsum. While they are both equally good investment options, choosing the right one based on your investment goal can be confusing. If you need help deciding which option to go with, don’t worry, as we will discuss both methods in this blog to help you make an informed decision.

A Systematic Investment Plan or SIP is a mutual fund investment method. The investor contributes a predetermined amount of money at regular intervals to gradually build their investment portfolio over time. Usually, the amount is deducted from the investor’s bank account on a set date, allowing them to benefit from the laws of compounding and rupee cost averaging and building wealth over the long term. Investing in SIPs is flexible, as you can choose to invest weekly, monthly, quarterly, or annually.

Lumpsum is another type of mutual fund investment option. Instead of investing the amount at regular intervals, the individual invests the amount all at once. Professional wealth managers suggest this investment option to those with a considerably large financial corpus.  Investing in a lumpsum can be a wise decision if you have additional cash on your hands, are eyeing a distant investment horizon, or are faced with a sudden, lucrative investment opportunity.

While you can opt for either of the mutual fund investment options based on your requirements, knowing the difference between the two is crucial to make an informed decision. Mentioned below are some important differences between SIPs and Lumpsums.

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