SIP vs. One-time investment: which is a better option? Use an SIP calculator to explore

SIP Calculator

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A Systematic Investment Plan (SIP) is a method of investing a fixed amount of money in a mutual fund scheme every month. It is a great way to invest for the long term and to average your cost of purchase. A one-time investment is when you invest a lump sum of money in a mutual fund scheme at one time. This is a good option if you have a large sum of money that you want to invest and you are not comfortable with the idea of investing a fixed amount of money every month. Check more on SIP Calculator!

So, which is a better option: SIP or a one-time investment?

The answer depends on a number of factors, including your investment goals, risk tolerance, and financial situation.

If you are investing for the long term, SIP is a better option. This is because SIP helps you to average your cost of purchase. This means that you are less likely to buy units at a high price and more likely to buy units at a low price. This can lead to higher returns over the long term. Check more on SIP Calculator!

If you are investing a lump sum of money, a one-time investment is a good option. This is because you can invest the entire amount at once and start earning returns immediately. However, a one-time investment is more risky than SIP, as you are more likely to buy units at a high price.

If you are risk-averse, SIP is a better option. This is because SIP helps you to spread your risk over time. This means that you are less likely to lose a large amount of money if the market goes down. Check more on SIP Calculator!

If you are financially comfortable, SIP is a better option. This is because SIP requires you to invest a fixed amount of money every month. This can be difficult if you are on a tight budget. Check more on SIP Calculator!

Here is an example of how you can use an SIP calculator to compare SIP and one-time investment:

Let’s say you are investing Rs.10,000 every month in a mutual fund scheme with an expected rate of return of 10%. If you invest for 10 years, your expected returns will be Rs.1,81,300.

Now, let’s say you invest Rs.1,00,000 in the same scheme at one time. Your expected returns will be Rs.1,61,000.

As you can see, SIP gives you higher expected returns than one-time investment. This is because SIP helps you to average your cost of purchase.

However, it is important to note that the past performance of a mutual fund scheme is not a guarantee of future returns. The actual returns you earn will depend on the performance of the market and the scheme you choose.

Ultimately, the best way to decide whether SIP or one-time investment is a better option for you is to talk to a financial advisor. They can help you to understand your investment goals, risk tolerance, and financial situation and recommend the best investment option for you.

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