bonus issueMay 12
SIP or Lump Sum? Which can generate larger corpus on Rs 9,00,000 investment in 10 years?
- Written by Shriti Aniraj
Published: Zee Business| Updated: Zee Business
Systematic Investment Plan (SIP) and lump sum are two approaches to investing in mutual funds. SIP involves investing a fixed amount at regular intervals, helping mitigate market volatility through rupee cost averaging. In contrast, lump sum investing requires a one-time investment, benefiting from market upswings but carrying higher risk. This article compares SIP and lump sum investments over 10 years with Rs 9 lakh, analysing their potential returns to determine which strategy can generate a higher corpus.
(Disclaimer: This is not an investment advice. Do your own due diligence or consult an expert for financial planning)
1/10
Understanding SIP (Systematic Investment Plan)
1/10
SIP allows investors to invest a fixed amount in mutual funds at regular intervals.
It helps in rupee cost averaging and mitigates market volatility.
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How Does SIP Work?
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The chosen amount is auto-debited from the bank account.
Mutual fund units are allocated based on the Net Asset Value (NAV).
Regular investments lead to compounding and wealth accumulation.
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SIP returns on Rs 9 lakh in 10 years
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Monthly investment: Rs 7,500
Total investment: Rs 9,00,000
Estimated returns: Rs 8,42,543
Total value: Rs 17,42,543
4/10
What is Lump Sum investment?
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Investors invest a large amount at once.
Mutual fund units are purchased at the prevailing NAV.
5/10
When is the right time for Lump Sum investment?
5/10
Best during market downturns to buy units at lower prices.
Risky during a bullish market due to high NAV costs.
Requires market research and timing expertise
6/10
Does Lump Sum provide compound returns?
6/10
Yes, as NAV increases, the investment grows exponentially.
Returns compound over time, leading to wealth accumulation
7/10
Minimum Lump Sum investment in mutual funds
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Minimum amounts vary by scheme.
Can be Rs 100, Rs 500, Rs 1,000 or Rs 5,000, depending on the fund.
8/10
Lump Sum returns on Rs 9 lakh in 10 years
8/10
Total investment: Rs 9,00,000
Estimated returns: Rs 18,95,263
Total value: Rs 27,95,263
9/10
SIP vs Lump Sum
9/10SIP: Best for risk-averse investors who prefer consistent contributions. Lump Sum: Suitable for those willing to take higher market risks for potentially better returns.
10/10
Which can generates higher corpus?
10/10
Lump sum investments can yield higher returns but come with market timing risks.
SIP provides stability, gradual investment, and mitigates market fluctuations.
Investors should choose based on risk appetite and financial goals.
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