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Investors often have a dilemma that 5 lakh rupees should be charged or gradually from SIP. The advantages and disadvantages of both methods vary.
Start or invest in investment slowly in investment? (Image: AI)Mathematics of Lumpum Investment
Lumpmas means investing the entire amount together. If the market is going up, then it gets the most benefit because the entire money starts growing immediately. For example, if you put 5 lakh rupees in a 12% annual return fund for 5 years, it can increase to about 8.81 lakh rupees. However, it has a higher risk because the loss can be equally bigger when the market declines.
In SIP i.e. Systematic Investment Plan, you invest a fixed amount every month or quarter. Suppose, if you want to do SIP for 5 years to reach a value of 5 lakhs, then you have to invest around Rs 10,700 every month (on 12% returns). The advantage of this is that the effect of market fluctuations gradually becomes balanced and the risk decreases. However, if the market is going up continuously, then the return may get a little less than the lampsam.
Which option is right for you?
If you trust the market and the ability to take the risk, then the lump sum investment can be a good option. At the same time, if you want to reduce the risk by investing slowly, then SIP is better for you. In simple words- Lumpmas beneficial in fast, safe in sip instability. To choose the right option, it is important to pay attention to your financial goals and risk tolerance.
Rakesh Singh is a chief sub -editor with a 14 -year experience in media and publication. There are fields of international affairs, politics and agricultural interest. Many articles written by Rakesh Singh published …Read more
Rakesh Singh is a chief sub -editor with a 14 -year experience in media and publication. There are fields of international affairs, politics and agricultural interest. Many articles written by Rakesh Singh published … Read more
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