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Mutual Fund:

Lump sum Investment VS SIP

Presented By,

Sarita

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MUTUAL FUND

Introduction

A mutual fund is a type of Investment Company that pools money from

many investors and invests the money in stocks, bonds, money-market

instruments, other securities, or even cash.

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Investment Modes In Mutual FundLUMP SUM INVESTMENT SYSTEMATIC INVESTMENT

PLAN (SIP)

Investing the entire sum of money at one

go

One way of building a corpus steadily

Money has the chance to build and grow

instead of being inactive

Allows to buy units by putting in small

sums on regular basis

When the equity markets have bottomed

up and are in a stage of rising up, lump

sum investment could be better choice.

SIP is better only when the stock

markets turn volatile because it buys

more units when markets drop and

fewer units when markets rise.

Investment Modes in Mutual Fund

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The net asset value of the fund is the cumulative market value of the assets fund

net of its liabilities.

It is calculated simply by dividing the net asset value of the fund by thenumber of units.

Simply it can be calculated as:

NAV= (Market Value of Assets - Liabilities)

Units Outstanding

Net Asset Value

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Jack L. Treynor (1966) has suggested a new predictor of mutual fund

performance, one that differs from virtually all those used previously by

incorporating the volatility of a fund's return in a simple yet meaningful

manner.

Review of Literature

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Main Objective:

To study the benefits of investing in Mutual Fund as lump sum or through

SIP mode.

Investorsoption for entry into a Mutual Fund.

Lump sum

SIP

Comparative analysis between SIP and Lump sum.

Objective of Study

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Research Design: Explorative Research

Data: Primary & Secondary data.

Sources of Data Collection:

Primary SourceStructured Questionnaire

Secondary Sourcewebsites, journals, newspapers

Population: Nagpur City

Sample Size: 50 People

Research Methodology

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Sample size is limited to only 50 investors of Nagpur city.

For the purpose of study Nagpur city is considered as the universe which

is a limitation.

Opinion of sample size cant be considered as a universal opinion.

Limitation

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Data Analysis:

1. No. of Years

2. Total amount invested

3. Unit Price

Let us take an example: Investment in diversified equity Fund from Jan to Dec

Suresh Rajesh

1000/month 12000 once

constant

Calculation of lump-sum & SIP

Investment

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Sureshs Investment Rajeshs Investment

Month NAV Amount Units Amount Units

Jan 9.345 1000 107.0091 12000 1284.1091

Feb 9.399 1000 106.3943

Mar 8.123 1000 123.1072

Apr 8.750 1000 114.2857

May 8.012 1000 124.8128

Jun 8.925 1000 112.0448

Jul 9.102 1000 109.8660

Aug 8.310 1000 120.3369

Sep 7.568 1000 132.1353

Oct 6.462 1000 154.7509

Nov 6.931

1000

144.2793

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Observation:

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Sureshs average unit price = 12000/1480.6012 = Rs. 8.105

Rajeshs average unit price = Rs. 9.345

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Reliance Equity Fund- Growth

Reliance Diversified Power Sector Fund Growth

Growth

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1. Mode of Investment Preferred by the Investors

Mode of Investment

preferred by Investors

One Time Investment Systematic Investment

Plan (SIP)

No. of Respondents 18 32

Analysis

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35%

65%One Time Investment

SIP

Interpretation:Out of 50 Investors 65% preferred One time Investment and 35 % Preferred

through Systematic Investment Plan.

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2.Have you invested in SIP, Lump sum or Both?

Type of Investment Investment in %

SIP 55

Lump Sum 10

Both 35

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55%

10%

35%

Type of Investment in %

SIP

Lump Sum

Both

Interpretation: From above chart It was analysed that 55% investors have

invested in Systematic Investment Plan, 10% in Lump sum and 35% in both

the category

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3. What is time duration of investment?

Time Duration Investment in %

Less than equal to 5 yrs 25

Less than equal to 4 yrs 8

Less than equal to 3 yrs 34

Less than equal to 2 yrs 25

Less than equal to 1 yrs 8

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0

5

10

15

20

25

30

35

40

Less than equalto 5 years

Less than equalto 1 years

Less than equalto 3 years

Less than equalto 2 years

Less than equalto 1 years

Investmentin%

Time Duration

Interpretation: The above bar chart depicts that most of the investors (i.e. 33.33%)

invest in less than 3 years. It means that most of the investors tend to invest

preferably for short duration.

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55% investor invests in SIP mode.

84% got more profit in SIP.

The maximum duration of investment in SIP is 3 years i.e. 34%.

The maximum allocation criteria in SIP are Rs. 1000-3000 i.e. 45%.

Findings

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Portfolio Management of Investors for their future prospects.

If you have strong stomach and dont panic on seeing your money evaporating in

the short term, you can definitely try your luck at lump sum investing. But if you are

a normal investor with a comparatively low risk appetite, it will be better for you to

stagger your investments via the SIP route.

Identifying and depending upon the investors future prospect, can choose out of orboth the options of investment in Mutual fund.

Conclusion

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Investors should pick one over the other based on their investment needs

and strategies.

SIP offer the right flexibility to those who find it difficult to make a lump-

sum investment.

Those who have a fair amount of clarity regarding their near-term expenses

and have adequate savings should prefer the lump-sum route.

Recommendation

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For Long Term Investors.. Lump sum Investmentis beneficial.

For Short Term Investors.. SIP is beneficial.

Opinion