SIP vs. Lump Sum: Which Approach Works Best for Mutual Fund Investments?

Do you wish to save money to have enough for your child’s college education? With the rising cost of fees for premier colleges, rising inflation, and devaluation of the rupee, it is becoming exceedingly difficult for people to save enough money to pay for their kids’ education, let alone for other needs.

Do you know that saving your money in a savings account is no longer a good option for idle money? As the interest rate you receive from a savings account is not at par with the inflation rate, thus in the long term, your buying power is reduced, and you lose money.

In that case, I would recommend investing in mutual funds with the best mutual funds helping you stay ahead of the curve and get a higher return on investment.

So if you see a considerable planned investment in the future, like your child’s higher education or marriage, investing your money and getting higher interest rates through mutual funds makes the most sense.

What is a Mutual Fund?

Mutual funds are a type of investment offered by banks and NBFCs which allow for the investment of your money at various frequencies for a higher rate than other kinds of investments.

Although mutual funds are relatively safe, they are affected by market fluctuations and volatility which may result in a loss of money. Still, ensure enough diversification in investment and invest in the best mutual funds for SIP and lump sum. You should get a significant return on your investment, especially the long-term ones.

What are the two kinds of mutual fund investments?

●     SIP

SIPs or Systematic Investment Plans are a periodic form of investment that allows you to invest money daily, weekly, monthly, quarterly, bi-annually, or annually. SIP offers a flexible form of investment with a low impact from market fluctuations and volatility. It equalizes the effect of the market and provides better returns. There is a lower barrier of entry as compared to lump sum investment.

●     Lump sum

A lump sum investment requires a higher original investment and making your investment at specific times based on the market. Lump sum investments are better when you have a large sum of money you want to invest for a considerable amount of time, typically over seven years. This offers you a much higher rate of return and allows you to earn significantly more.

How to choose best mutual funds in India?

What might be the best option for others might differ from the one for you, so only you can figure out the best investment option. But based on these differences and using a SIP Interest Calculator from Bajaj Finserv, you should be able to find the best option based on your risk appetite and the current market conditions.


Thus you should consider the best option for you based on the differences and then decide. I prefer saving a bit from my income and investing that amount over time to get a good return on my investment, which is why I like getting a SIP over a lump sum.

I recommend using Bajaj Finserv to invest in mutual funds as it provides a simple, concise, and helpful way to invest your money and the best mutual funds for long term.

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