What is the difference between sip and lumpsum in mutual funds?

SIP is a method of investing a fixed amount of money at regular intervals over a period of time. For example, you could invest Rs. 5,000 every month in a mutual fund via SIP. The amount is deducted automatically from your bank account on a specific date every month. SIPs are a popular way to invest in mutual funds because they help investors to achieve their financial goals in a disciplined manner by averaging out the cost of investing over time.

On the other hand, lump sum investment is a one-time investment of a large sum of money into a mutual fund. This means that you would invest the entire amount at one go, instead of spreading it out over a period of time.

The main difference between SIP and lump sum investment is the timing of the investment. While SIP is a regular investment made over a period of time, lump sum investment is a one-time investment made at a particular point in time.