In the current market scenario, should I look at investing lumpsum or do a SIP?
– Ashutosh Sarin
Given the strong performance of the equity markets over the last couple of years and the resulting rise in valuations, prospective returns seem to be slighter lower than previous years. In such a scenario, it might be advisable to invest through Systematic Investment Plans (SIPs) vis-à-vis lumpsum. In fact, SIPs allow an investor to deploy the principle of rupee cost averaging to take advantage of market volatility. When the net asset value (NAV) of a fund is high (typically when markets have risen) fewer units of a fund would be purchased from the investment amount and when the NAV is lower more units of a fund would be purchased with the same investment amount. Thereby, reducing the average cost of units purchased over a period of time.
