Monthly SIP vs Annual SIP vs Lump Sum: Rs 1,000 monthly SIP, Rs 12,000 annual SIP vs or Rs 60,000 lump sum MF investment, whichever works best over the years?
Monthly SIP vs Annual SIP vs Lump Sum Mutual Fund Investment: Did you know that fundhouses today offer different types of structured investment plans (SIPs) to suit your investment style and cash flow? By carefully choosing the right frequency and amount, one can make the most of their SIP to invest in the mutual fund scheme of their choice without disrupting their cash flow or compromising on their regular expenses. In this article, you can compare the potential results of different types of investments in a mutual fund scheme for the same expected annual return of 12 percent and the same investment tenure of 5 years: A monthly SIP of Rs 1,000 and a SIP of -Rs 12,000 per year. .
However, nothing beats the effect of a lump sum investment in a mutual fund, where the investor parks the entire sum of money at once. This is due to integration. Therefore, comparing these ratios with the total investment of the same amount invested will further highlight the differences between these investments.
Which one should you choose: A monthly SIP of Rs 1,000, a SIP of Rs 12,000 per year or a lump sum investment of Rs 60,000—every 5 years?
Let’s compare these three scenarios: A monthly SIP of Rs 1,000 for 5 years, an annual SIP of Rs 12,000 for 5 years and a total investment of Rs 60,000 for 5 years.
In each of these three cases, the total amount invested will be Rs 60,000.
Scenario 1: Rs 1,000 monthly SIP for 5 years
At an expected annual return of 12 per cent, a monthly SIP of Rs 1,000 will accumulate a corpus of around Rs 82,486 (with a principal of Rs 60,000 and an expected return of Rs 22,486), the figures show.
Scenario 2: Rs 12,000 per year SIP for 5 years
For the same expected return, an annual SIP of Rs 12,000 will result in a corpus of approximately Rs 85,382.27 (Rs 60,000 principal return and estimated return of Rs 25,382), according to the calculations.
Scenario 3: investment of Rs 60,000 for 5 years
A one-time investment of Rs 60,000 will result in a corpus of approximately Rs 1.06 lakh (with an estimated return of Rs 45,741).
ALSO READ: Small SIP, Big Impact: Rs 500 monthly investment for 30 years or Rs 5,000 for 10 years, which do you think works better?
Power of Integration | The bigger the investment over a longer period of time, the bigger the result…
Financial planners often emphasize the importance of investing and staying invested for a long time to obtain compounding power, which is nothing but a process where the interest earned on an investment is reinvested to generate more interest, creating a snowball effect that can build. wealth significantly over time. Learn more about the power of integration
