The Core Difference
SIP spreads your investment over time, reducing the risk of investing at a market peak. Lump sum invests everything at once, which can generate higher returns if the market rises but carries higher risk if the market drops immediately after your investment.
| Factor | SIP | Lump Sum |
|---|---|---|
| Risk | Lower (averaging) | Higher (market timing) |
| Best for | Regular income, long-term | Windfall, bonus, inheritance |
| Returns in rising market | Good | Better |
| Returns in falling market | Better | Worse |
| Discipline | Built-in | Requires self-control |
When to Choose SIP
Choose SIP when you have a regular monthly income, want to build wealth over 5+ years, want to avoid the stress of timing the market, or are a first-time investor. SIP is the default recommendation for most retail investors.
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