Introduction
Is it better to invest a flat lumpsum or spread your money over months using an SIP? Let us break down the performance of both under different market conditions.
Understanding the Dynamics
A lumpsum investment puts 100% of your capital to work immediately. If market cycles are at a low point, this maximizes compounding gains. An SIP spreads out the entry points, reducing the impact of short-term market drops.
Performance Breakdown
| Criteria | SIP | Lumpsum |
|---|---|---|
| Market Timing | Not Required | Highly Critical |
| Risk Profile | Low to Moderate | Higher short-term risk |
| Best in | Volatile / Bear markets | One-way Bull markets |