Name: Reetika Tiwari (2008 – 2010)
Title: Comparative Analysis of Systematic Investment Plan and Lump Sum Investment
Summary
Mutual Funds over the years have gained immensely in their popularity. Apart from the many advantages that investing in mutual funds provide like diversification, professional management, the ease of investment process has proved to be a major enabling factor. However, with the introduction of innovative products, the world of mutual funds nowadays has a lot to offer to its investors. With the introduction of diverse options, investors needs to choose a mutual fund that meets his risk acceptance and his risk capacity levels and has similar investment objectives as the investor.
Most importantly, mutual funds provide risk diversification: diversification of a portfolio is amongst the primary tenets of portfolio structuring, and a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option.
Lastly, Evaluate past performance, look for stability and although past performance is no guarantee of future performance, it is a useful way to assess how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers.
SIP and Lump sum are the two techniques to invest in mutual funds. Any investor can choose one out of them and can invest their money into mutual funds. SIP is Systematic Investment Plan which is very helpful to salaried and middle class man. They can invest their saving into Systematic Investment Plan and can collect huge funds for future.
SIP is paid in monthly or quarterly as per the scheme. But lump sum is paid only one time and the whole transaction is based on this investing money. Opting SIP, an investor can invest their saving into it and can safe his money doing that. SIP is good because if it seems that market will goes down in few days so an investor can safely withdraw his money and can safe his money.
Objectives:
Title: Comparative Analysis of Systematic Investment Plan and Lump Sum Investment
Summary
Mutual Funds over the years have gained immensely in their popularity. Apart from the many advantages that investing in mutual funds provide like diversification, professional management, the ease of investment process has proved to be a major enabling factor. However, with the introduction of innovative products, the world of mutual funds nowadays has a lot to offer to its investors. With the introduction of diverse options, investors needs to choose a mutual fund that meets his risk acceptance and his risk capacity levels and has similar investment objectives as the investor.
Most importantly, mutual funds provide risk diversification: diversification of a portfolio is amongst the primary tenets of portfolio structuring, and a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option.
Lastly, Evaluate past performance, look for stability and although past performance is no guarantee of future performance, it is a useful way to assess how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers.
SIP and Lump sum are the two techniques to invest in mutual funds. Any investor can choose one out of them and can invest their money into mutual funds. SIP is Systematic Investment Plan which is very helpful to salaried and middle class man. They can invest their saving into Systematic Investment Plan and can collect huge funds for future.
SIP is paid in monthly or quarterly as per the scheme. But lump sum is paid only one time and the whole transaction is based on this investing money. Opting SIP, an investor can invest their saving into it and can safe his money doing that. SIP is good because if it seems that market will goes down in few days so an investor can safely withdraw his money and can safe his money.
Objectives:
- To evaluate investment performance of selected mutual funds in terms of risk and return.
- To evaluate and create an ideal portfolio consisting the best mutual fund schemes which will earn highest possible returns and will minimize the risk.
- To analyze the performance of mutual fund schemes on the basis of various parameter.
Recommendations:
Investment is the technique by which people save the money for future and increase their living standard. Many people who don’t know and don’t want to take more risk by investing in shares and securities therefore Mutual Funds are better instruments to save their money for future and provide them better return.
SIP and Lump sum are two techniques to invest money in mutual fund. People should not confuse about them. Both are better themselves. When market is ups and down nature it is better to invest their money through SIP another reason for SIP is because it is monthly investment so when there are salaried person who want to invest money in mutual fund then SIP is good technique because they have limited saving that’s why SIP is good for salaried persons.
When I surveyed in the market there are many people who really don’t know what actually mutual fund means is. I realized that there are many persons who don’t invest money in mutual fund they only invest in insurance or fixed deposit.
I will suggest here that there is need of more advertising through canopies which will help to those people who want to invest in mutual fund and will get more information through canopies.
Some people prefer to invest a lump sum when they have the money available - perhaps from a bonus at work. The benefit is that you are less likely to spend the money on other things!
However, if you do not have a lump sum, you don't have to save up until you have a large amount to invest. You can invest a relatively small amount every month that can build up into a worthwhile nest egg. If you set up a monthly savings plan, you will soon come to think of your regular payment as an essential part of your budget. What's more, you can benefit from a phenomenon known as "rupee cost averaging", no matter how markets are performing:
Investment is the technique by which people save the money for future and increase their living standard. Many people who don’t know and don’t want to take more risk by investing in shares and securities therefore Mutual Funds are better instruments to save their money for future and provide them better return.
SIP and Lump sum are two techniques to invest money in mutual fund. People should not confuse about them. Both are better themselves. When market is ups and down nature it is better to invest their money through SIP another reason for SIP is because it is monthly investment so when there are salaried person who want to invest money in mutual fund then SIP is good technique because they have limited saving that’s why SIP is good for salaried persons.
When I surveyed in the market there are many people who really don’t know what actually mutual fund means is. I realized that there are many persons who don’t invest money in mutual fund they only invest in insurance or fixed deposit.
I will suggest here that there is need of more advertising through canopies which will help to those people who want to invest in mutual fund and will get more information through canopies.
Some people prefer to invest a lump sum when they have the money available - perhaps from a bonus at work. The benefit is that you are less likely to spend the money on other things!
However, if you do not have a lump sum, you don't have to save up until you have a large amount to invest. You can invest a relatively small amount every month that can build up into a worthwhile nest egg. If you set up a monthly savings plan, you will soon come to think of your regular payment as an essential part of your budget. What's more, you can benefit from a phenomenon known as "rupee cost averaging", no matter how markets are performing:
- If the market goes up, the units you already own will increase in value.
- If the market goes down, your next payment will buy more units.
Conclusions:
These two techniques are better themselves. People should consider before investing money in mutual fund and invest in good AMC. It doesn’t matter that SIP or Lump Sum will give better return. It all depends on fund manager and AMC.
SIP is a mean not an end. Investors would do well to realize that the SIP is means for achieving one’s financial goal and not an end by itself. An investment in a poorly managed fund remains just that irrespective of the investment mode i.e. lump sum or SIP. Hence investors first select a well managed fund which has a track record to show for.
Many AMC show result in their fact sheet which has good performance it doesn’t mean that this mutual fund will perform in future. So investors should consider more on this point before investment.
According to survey, 34% people say that Lump Sum is good technique for investment and on the other hand, 66% people say that they will chose SIP to invest in mutual fund. So trends say that SIP is good for investment purpose in mutual fund.
But apart from that people also depend on the market and they take advices from some experts of this field. They invest what they want.
I’ve seen that people don’t want to invest money monthly and they want to get rid of this kind of investment because they think that this type of investment can divert their mind from their business.
These two techniques are better themselves. People should consider before investing money in mutual fund and invest in good AMC. It doesn’t matter that SIP or Lump Sum will give better return. It all depends on fund manager and AMC.
SIP is a mean not an end. Investors would do well to realize that the SIP is means for achieving one’s financial goal and not an end by itself. An investment in a poorly managed fund remains just that irrespective of the investment mode i.e. lump sum or SIP. Hence investors first select a well managed fund which has a track record to show for.
Many AMC show result in their fact sheet which has good performance it doesn’t mean that this mutual fund will perform in future. So investors should consider more on this point before investment.
According to survey, 34% people say that Lump Sum is good technique for investment and on the other hand, 66% people say that they will chose SIP to invest in mutual fund. So trends say that SIP is good for investment purpose in mutual fund.
But apart from that people also depend on the market and they take advices from some experts of this field. They invest what they want.
I’ve seen that people don’t want to invest money monthly and they want to get rid of this kind of investment because they think that this type of investment can divert their mind from their business.
Some people invest money through Lump Sum at once. So they can concentrate more their business or activities etc.
So the outcomes of this survey is that people invest money in mutual fund by both techniques, SIP and Lump Sum but some time investor is in more profitable and some not its depends on market fluctuation.
Limitations:
There are some problems that I faced when I surveyed, I saw that people doesn’t convinced easily to invest in mutual fund they have misperception that investing in mutual fund is like a gambling and some people says that investing in mutual fund is same as investing in share market.
I surveyed this when share market was very down and day by day it was going down and down so people were hesitating to invest in mutual fund.
These all things are happen when there is lack of proper advertising. People have good knowledge of insurance and other things than mutual fund. So first thing is that people should aware these all things they even don’t know the terms and glossary.
So the outcomes of this survey is that people invest money in mutual fund by both techniques, SIP and Lump Sum but some time investor is in more profitable and some not its depends on market fluctuation.
Limitations:
There are some problems that I faced when I surveyed, I saw that people doesn’t convinced easily to invest in mutual fund they have misperception that investing in mutual fund is like a gambling and some people says that investing in mutual fund is same as investing in share market.
I surveyed this when share market was very down and day by day it was going down and down so people were hesitating to invest in mutual fund.
These all things are happen when there is lack of proper advertising. People have good knowledge of insurance and other things than mutual fund. So first thing is that people should aware these all things they even don’t know the terms and glossary.
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