S.I.P stands for Systematic Investment Plan. In S.I.P every quarter of year or every month a period of time an investor shall invest for a fixed period of time like R.D(Recurring Deposit) in which it follows the same concept but R.D is for investing every day or week.

For example: If one invests in a mutual fund every month for a time period, the investor gets a return based on N.A.V(Net Asset Value).

·  If the market is down, the investor will get less N.A.V per unit.

·  If the market is rising, the investor will get more N.A.V per unit.

·  Advantage over Lump sum is you invest a specific amount every day and that amount is auto debited, and it’s automatically invested in the mutual fund chosen by the investor.

So, if an investor S.I.P, then the investor has to save an amount every month, which means saving every month. One of the reasons people start R.D(Recurring Deposit) even if returns are low but there will be savings.

Lump Sum is basically known as investing big and all at once. However, Lump sum is also known to get risky easily as you invest all at once.

·  Going for a lump sum is a great choice if you have good stock analysis, valuation and knowledge.

·  If thinking of a long-term investment, then going for a lump sum might also be a great choice as it usually gives better return than S.I.P.

·  It also provides greater returns than S.I.P but you shall have good understanding about the stock market and valuation.

It’s also said that if you have a good amount of money and have been wanting to invest in a mutual fund, go for a lump sum and if you want to establish a habit of saving money, go for S.I.P. Many investors do S.I.P and lump sum both. That way if they have started S.I.P and when the market falls down by a big margin (usually during bear run) investors invest on lump sum as well so they can take advantage of low valuation of stocks.