#SIP or lumpsum - Which is better?
Probably, most people will vote in favour of SIP.
But, that’s not entirely true.
On many occasions, lumpsum has given better results than SIP.
So, where do you make higher returns?
We analysed the data. Here’s what we found.
A 🧵
Probably, most people will vote in favour of SIP.
But, that’s not entirely true.
On many occasions, lumpsum has given better results than SIP.
So, where do you make higher returns?
We analysed the data. Here’s what we found.
A 🧵
We compared SIP and lumpsum returns in #nifty50 over different time horizons.
Consider this example
One person invested Rs 6 lakh 10 years ago.
Another one starts a monthly SIP of Rs 5,000 at the same time (5,000 X 120 months).
Who earns better returns?
Consider this example
One person invested Rs 6 lakh 10 years ago.
Another one starts a monthly SIP of Rs 5,000 at the same time (5,000 X 120 months).
Who earns better returns?
What did we find?
The results were mixed.
Of the 14 different periods we checked, SIP did better 7 times.
Lumpsum offered a better rate of return on 7 occasions.
Check the table below to see the findings.
The results were mixed.
Of the 14 different periods we checked, SIP did better 7 times.
Lumpsum offered a better rate of return on 7 occasions.
Check the table below to see the findings.
What is the takeaway from this exercise?
SIP and lumpsum are merely methods of investing.
One doesn’t guarantee better returns over the other.
In fact, if you have the #money, it’s better to go for the lumpsum route.
Why? Because you can create a bigger corpus.
Check how 👇
SIP and lumpsum are merely methods of investing.
One doesn’t guarantee better returns over the other.
In fact, if you have the #money, it’s better to go for the lumpsum route.
Why? Because you can create a bigger corpus.
Check how 👇
Let’s continue with the same example.
But this time, we won’t just check the rate of return.
We’ll check the final value of the #investment.
Check the table to see how much extra corpus you can create if you invest in lumpsum as against SIPs.
But this time, we won’t just check the rate of return.
We’ll check the final value of the #investment.
Check the table to see how much extra corpus you can create if you invest in lumpsum as against SIPs.
In all scenarios, the end corpus is higher in the lumpsum method.
And this was for obvious reasons.
Why is that, you ask?
In the lumpsum, you start with a much bigger amount which gets more time to compound.
And this was for obvious reasons.
Why is that, you ask?
In the lumpsum, you start with a much bigger amount which gets more time to compound.
Some #investors are of the view that if you have a large corpus, you should split it into 6 equal monthly installments.
However, this is not a foolproof method.
It may or may not give you better returns, as it all depends on the market movements.
However, this is not a foolproof method.
It may or may not give you better returns, as it all depends on the market movements.
Here’s the summary.
If you have the money, don’t shy away from lumpsum investments.
Your money is better off in equities than in your #bank account in the long term.
And if you have a regular #income & want to gradually create a bigger corpus, there’s no better way than SIP.
If you have the money, don’t shy away from lumpsum investments.
Your money is better off in equities than in your #bank account in the long term.
And if you have a regular #income & want to gradually create a bigger corpus, there’s no better way than SIP.
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Please like, share, and retweet the first tweet.
For more threads, follow us.
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