SIP vs Lump Sum: Which Investment Route Suits a Beginner?
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A Systematic Investment Plan (SIP) lets you invest a fixed amount at regular intervals — usually monthly — while a lump sum is a one-time investment of a larger amount. Both are valid ways to invest in mutual funds, and the better fit depends on your circumstances.
For someone earning a regular salary, a SIP is often easier to sustain. It builds a saving habit, spreads your purchase price across market highs and lows (commonly referred to as rupee-cost averaging), and doesn't require you to guess whether the market is 'high' or 'low' right now.
A lump sum can make sense when you already have a large sum available — for example, a bonus or inheritance — and are comfortable with the fact that its entry point will affect near-term performance more than a SIP's would.
Many first-time investors use a combination: a lump sum to get started, followed by an ongoing SIP to build the habit further.