Should I invest as SIP or lumpsum Nadeem, 08 Nov 2012

I am lookinf for investing in Mutual Funds. Should I go for SIP or lumpsum investing. I am confused because of different opinions.Please suggest me

Fintotal Answer

Even if you have enough amount to go for lump sum investment you should rather invest it in installments through SIP.  Suppose you invest lump sum now. If underlying shares/bonds are expensive, you'd have fewer units of the fund. When the fund's value appreciates, more the number of units you have, more will be your retuns. Logic tells us we should buy more units when they are cheap and fewer when they are expensive.   But the problem is there is no way to know if current price (or NAV) is the lowest or it can go down further. This is solved with SIP. An SIP adjusts for price of underlying secutiries automatically. So any huge amount invested in mutual funds should always be through SIP.

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