Mutual fund Investing


Mutual Fund Investment: (Systematic Investment) SIP or Lump sum?

Filed under Mutual Funds


Mutual Fund Investment- SIP or Lump sumThere have always been a debate on which is a better way for investment in Mutual Fund – Lump sum or Systematic Investment Plan (SIP). Actually the answer to this is not easy and it depends on the time frame we are looking at. There have been some phases where SIP has outperformed while at other times lump sum investment has done better. We have picked up 5 different situations of Indian Stock market since year 2000.

Here are some Assumptions:

  1. Rs. 60,000 is invested in both lump sum and SIP and is used for buying SENSEX.
  2. Since the cash flow structure for the two is different, to make it comparable we assume that SIP investor puts the entire amount in a debt fund and starts systematic transfer plan (STP) to the equity fund.
  3. The above debt…

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