Understanding SIP (Systematic Investment Plan)
Invest fixed amounts at regular intervals (weekly, monthly).
Also known as dollar-cost averaging (DCA).
You buy more shares when prices are low, fewer when high.
Reduces timing risk and psychological pressure.
Understanding Lump Sum Investing
Invest the entire amount immediately.
Historically, lump sum and SIP have had different outcomes depending on market conditions.
Money is in the market longer, which can capture growth during bull markets.
But it exposes you to timing risk if markets decline shortly after investment.
Comparing the Two Approaches
Lump sum: may align with investors comfortable with volatility and with a long time horizon.
SIP: may align with investors seeking to spread timing risk or when deploying income regularly.
Behavioral impact: SIP can reduce the emotional impact of market timing by spreading purchases over time.
