SIP vs. Lumpsum Investment: Do you invest in SIPs or lump sum investments? But which of the two offers better returns? Let's find out.

Which investment will give higher returns?

SIP vs. Lumpsum Investment: Investing has become a necessity for everyone these days. To secure their future, people make small investments today, which can yield substantial returns in the long run. However, earning substantial returns depends entirely on where you invest. Most people invest through SIPs, while lump-sum investments come in second.

People investing in mutual funds often wonder whether SIP or a lump sum investment is better. Both methods help generate significant wealth over the long term, but their working methods differ. If you invest ₹1 lakh in each of these two, let's find out which one will yield higher returns.

Returns on investing ₹1 lakh in a SIP?
Let's assume someone invests ₹1 lakh in a SIP (Systematic Investment Plan). What is the return after 8 years at 12%? See here:

Monthly installment – ​​Rs 1000
Total investment – ​​Rs 96000
Return – Rs 61024
Total fund – Rs 157024

What is the return on investing ₹1 lakh in a lump sum investment?
Similarly, let's assume that someone invests ₹1 lakh in a lump sum investment. This is a lump sum. So, what return can you expect after 8 years at 12%? Find out here:

Lump sum investment amount - Rs 1 lakh
Returns - Rs 1,47,596
Total funds - Rs 2,47,596

This shows that if both are invested for the same period, the lump sum investment amount will give higher returns, because the entire amount remains invested from the first day.

Which of the two is better?
We've already seen in the example that lump sum investments yield higher returns. However, the decision on which of the two is better and which one to invest in depends entirely on the investor. If you have a large lump sum, a risk tolerance, and a long-term investment horizon, a lump sum may be preferable. However, if you don't have a large lump sum and have a regular income, a SIP is an easier and better option.