SIP vs Lump Sum - Which Is Better- - Franklin Templeton India
Franklin Templeton India
2017-09-12
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Confused about the difference between SIP vs lump sum? Watch the video to find out how choosing between SIP or lump sum depends upon the market conditions and your investment needs, and what is rupee cost averaging in sip and how it works when you invest in an SIP.
SIP or Lumpsum – this is probably the most common debate in the world of mutual funds.
SIP or Systematic Investment Plans are a disciplined way of investing wherein the investor invests an amount regularly and reaps benefit of it after a certain time as SIP returns. In lumpsum investment, a significant amount of money is invested all at once and the returns are obtained after a certain period of time. One needs to consider the pros and cons of both.
But before that, let’s first understand the concept of rupee cost averaging.
Suppose you decide to invest a principal of Rs.120000 in an equity mutual fund at an NAV of Rs.20 as lumpsum. You will end up with 6000 units.
Now suppose your friend also invests a principal of Rs.120000 in equities, but as SIP by investing 30000 every quarterly. Say on 1st January the NAV was 20, thus your friend receives 1500 unit. On 1st April NAV was 18, giving 1666.67 units. On 1st July NAV was 15 rupees, giving 2000 units and on 1st October, NAV was 17 giving 1764.71 units.
On December say the NAV is 22, which means you earn a 10% return, while your friend gets a much larger return. This difference is because of rupee cost averaging. Your friend benefitted from a lower average cost.
This can work against your friend if the NAV were to rise with time. Your friend would end up with lesser units than you.
Lumpsum strategies work when one manages to invest at a time the market prices are rising. SIP work better when the prices are going down. Frequency and the time of withdrawal also plays an important role in deciding which is better.
If you are still confused with the calculations, us the SIP calculator and Lumpsum calculator to help you decide:
https://accounts.franklintempletonindia.com/guest/#/sipcalculators
https://accounts.franklintempletonindia.com/guest/#/lumpsumcalculators
We hope you enjoyed watching this video! Watch more, and we’ll help you learn about different investing concepts. You can also write to us with your feedback ([email protected])
View more such videos in the playlist Franklin Templeton Academy:
https://www.youtube.com/playlist?list=PLpDLpRd877mRvP2fuzG7Bby1cwuLQ6i3W
Invest in Mutual Funds with Franklin Templeton.
Official Website: https://www.franklintempletonindia.com/
Facebook: https://www.facebook.com/FranklinTempletonIndia/
LinkedIn: https://www.linkedin.com/company/3676/
Instagram: https://www.instagram.com/ftiindia/?hl=en
Twitter: https://twitter.com/ftiindia?lang=en
SIP or Lumpsum – this is probably the most common debate in the world of mutual funds.
SIP or Systematic Investment Plans are a disciplined way of investing wherein the investor invests an amount regularly and reaps benefit of it after a certain time as SIP returns. In lumpsum investment, a significant amount of money is invested all at once and the returns are obtained after a certain period of time. One needs to consider the pros and cons of both.
But before that, let’s first understand the concept of rupee cost averaging.
Suppose you decide to invest a principal of Rs.120000 in an equity mutual fund at an NAV of Rs.20 as lumpsum. You will end up with 6000 units.
Now suppose your friend also invests a principal of Rs.120000 in equities, but as SIP by investing 30000 every quarterly. Say on 1st January the NAV was 20, thus your friend receives 1500 unit. On 1st April NAV was 18, giving 1666.67 units. On 1st July NAV was 15 rupees, giving 2000 units and on 1st October, NAV was 17 giving 1764.71 units.
On December say the NAV is 22, which means you earn a 10% return, while your friend gets a much larger return. This difference is because of rupee cost averaging. Your friend benefitted from a lower average cost.
This can work against your friend if the NAV were to rise with time. Your friend would end up with lesser units than you.
Lumpsum strategies work when one manages to invest at a time the market prices are rising. SIP work better when the prices are going down. Frequency and the time of withdrawal also plays an important role in deciding which is better.
If you are still confused with the calculations, us the SIP calculator and Lumpsum calculator to help you decide:
https://accounts.franklintempletonindia.com/guest/#/sipcalculators
https://accounts.franklintempletonindia.com/guest/#/lumpsumcalculators
We hope you enjoyed watching this video! Watch more, and we’ll help you learn about different investing concepts. You can also write to us with your feedback ([email protected])
View more such videos in the playlist Franklin Templeton Academy:
https://www.youtube.com/playlist?list=PLpDLpRd877mRvP2fuzG7Bby1cwuLQ6i3W
Invest in Mutual Funds with Franklin Templeton.
Official Website: https://www.franklintempletonindia.com/
Facebook: https://www.facebook.com/FranklinTempletonIndia/
LinkedIn: https://www.linkedin.com/company/3676/
Instagram: https://www.instagram.com/ftiindia/?hl=en
Twitter: https://twitter.com/ftiindia?lang=en
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