SIP vs. Lump Sum—Which One is Right for You?

Posted on: 20 Dec, 2023

While lump sum investments are one-time investments that do not necessarily follow any fixed interval, an SIP is an investment scheme through which investors make equal payments into a mutual fund at fixed intervals (usually every month) over a certain period. Normally, in Bangladesh, the minimum payment or installment size is BDT 5,000 for individuals and BDT 10,000 for institutions.

Whether SIP or Lump Sum Investment is right for you depends on mainly the following factors:

  • Investing Flexibility: If investing at fixed intervals is more convenient for you, then SIP could be the way for you.

  • Capital Requirement: Typically, the capital requirement is low in the case of SIP because the total investment is spread over a long period. Since the capital requirement for one-time investments usually tends to be high, you might want to go for SIP if you’re looking to invest in small installments.

  • Goal: If your investment goal is to invest over a long period, then SIP is the way to go.

  • Volatility: If you’re looking for the least fluctuation or volatility, then SIP is ideal.

Difference between SIP and Lump Sum Investment:

To learn more about mutual funds, you may read our guide on mutual fund investing.

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  • Mutual Fund, Investing, Systematic Investment Plan, SIP, Investing Process