![]() In the case of SIP, since the principal amount can be as low as Rs. When the principal amount is higher, all other factors being equal, the result of the generated return will be higher. On a closer look however, we see that a lump sum investment leverages the power of compounding in a superior way. ![]() : SIP investments work on the concept of rupee cost averaging and the power of compounding. Lump sum investing takes better advantage of the power of compounding.This is because the entire amount will be taken into account during the bull period of the market, as opposed to only a fraction of the amount of investment in the case of SIPs. ![]() If a lump sum investment is made at the time of economic slump, especially when there is certain recovery potential in the short term, the returns can be much higher than they would be in case investment is made via a SIP. : In the case of long term investments, their timing can be especially pivotal.
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