SIP vs Lumpsum: Power of COMPOUNDING Using SIP or LUMPSUM 2025

Whenever we think of investing in stocks or shares or mutual funds or index funds, we think of how to invest for beginners? And how does power of compounding works when we invest through SIP or lumpsum in stock markets? So there are 2 methods of investing in stocks and mutual funds, namely SIP (systematic investment plan) and lumpsum investments. Individuals can opt to make a lumpsum payment or invest through a systematic investment plan (SIP) based on several factors. Before delving into SIP vs. lumpsum mutual funds, it is imperative to know what a SIP is – A SIP or systematic investment plan allows an investor to allocate a small sum of funds regularly in their preferred mutual fund scheme. As the term implies, this is a systematic method of allocating fixed amounts of money in a periodic manner. This can be semi-annually, quarterly or monthly, etc. On activating a systematic investment plan, a fixed amount gets deducted from an individual’s bank account on a monthly basis. As a result, achieving one’s financial goals can become easier if he/she invests steadily in this manner. Unlike a lumpsum investment, individuals spread their investment over time with a systematic investment plan. Therefore, one need not have substantial funds to get started with an MF investment through SIPs. This, in turn, helps them instil a sense of financial responsibility in the long run. A lumpsum investment enables investors to deposit the entire amount available in one go for acquiring their desired number of mutual fund units. This route of investing tends to be beneficial when a fund’s net asset value or NAV is less. Here, a lower NAV allows individuals to acquire more units. On the other hand, a higher NAV reduces the number of units for an investor. Now, with the basic idea of the investment modes clear, let’s move on to the difference between SIP and lumpsum. Are you searching “SIP or lumpsum which is better”? Continue reading to gain an idea regarding SIP or lumpsum, which is better in a mutual fund! Investments through a lumpsum and a SIP comes with their own set of benefits. Investors can find it challenging to choose one out of these two. That said, knowing the differences between the two will help one make an informed decision. The major difference between a lumpsum investment and a SIP is the cash flows. Individuals allocate funds just once in a lumpsum investment. But in a SIP, they invest on a regular basis. Many individuals prefer a SIP because it inculcates financial discipline. It also helps unlock the power of compounding by investing for longterm to achieve financial freedom. Moreover, individuals must consider some critical factors when deciding upon a suitable investment mode for them. These factors include the type of fund, disposable sum, investors’ financial goals, and investment objectives. That marks the end of this article on SIP vs. lumpsum. Potential investors must consider the various points mentioned above in order to make an informed decision when choosing one of these investing routes. Welcome to The Healing Mindset – Your Guide to Mental Wellness and Mindfulness! At The Healing Mindset, we believe in the power of a healthy mind to transform your life. Whether you're looking to reduce stress, manage anxiety, practice mindfulness, or simply find peace in a chaotic world, our channel is here to support you every step of the way. ✨ What We Offer: Guided Meditations: Relax and recharge with calming mindfulness practices. Mental Health Tips: Learn practical strategies to improve your emotional well-being. Self-Care Routines: Discover how to prioritize yourself and build a healthier lifestyle. Mindfulness Techniques: Stay present and focused in your daily life. Inspirational Stories: Hear from others who have overcome challenges and found healing. Join our community of like-minded individuals who are on a journey to better mental health. Together, we can create a life filled with clarity, calm, and joy. 🔔 Subscribe and hit the bell icon to stay updated with our latest videos!