How should a mutual fund investment portfolio be ideally allocated between lumpsum and SIP?
mutual funds, it is essential to have a well-balanced investment portfolio. One key decision that investors often struggle with is the right allocation between mutual fund lumpsum and SIP (Systematic Investment Plan). A lumpsum investment is beneficial when an investor has a sizable amount of money available to invest.
It allows for a potentially higher growth rate as the entire investment is deployed at once, giving the capital more time to benefit from market fluctuations and potential appreciation in the long run. However, lumpsum investments are subject to market timing risks, as the investment is made at a specific point in time when the market may be overvalued or undervalued. On the other hand, a SIP allows investors to invest regularly over a period of time.
This investment strategy mitigates the impact of market volatility as investments are made at different price points. SIPs are particularly beneficial for investors looking to invest small amounts regularly and have a disciplined approach to investing. So, how should one effectively balance mutual fund lumpsum and SIP investments in their portfolio? Sundeep Sikka, ED and CEO, Nippon India Mutual Fund says, "In the mutual fund industry, systematic investment is quite popular.
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