This is one of the most asked question in finance world where everyone wants to know what is the best way to invest in the market. You can ask anyone out there who follows the finance, for them finding best is always the question, whether going with SIP or Lumpsum.
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Most of the people think SIP or Systematic investment plan is the best way to invest in market because it gives the dollar cost averaging way of investing. Also it works in all season be it bear or bull. Because when it's bear you will get more units whereas when it's bull your money will keep on invested as no one can predict the top.
That's why it is being told that never stop your SIP because you never know the bottom or the top in the market. For example, people are thinking that Nifty cannot go further up as it is at all time high. But everyday we are seeing that there is huge jump in the market and changing everyone thought process.
Another set of people think that why should be invested when the Markey it up. Keep that cash in hand and invest whenever you see a dump in the market. As opposed to the SIP when the market goes down to a certain percentage you will deploy your capital. Now the good think about this strategy is that you get more units when the market is down but again the problem is no one can predict the future.
What if you invested lumpsum and the market have gone down after that. You don't have capital for that. It is believed that cash is the king because the cash is used when the market goes down and thus gives you better return as compared to the SIP.
Most of the people will say that SIP is best because since no one can predict the future it is the best way to invest. And to be honest this is true also, because for that you don't have to wait to watch the market everyday if it has gone down or not.
To be honest, nothing is perfect be it SIP Or Lumpsum but if we combine that we will get the best strategy. So let's find our our best strategy. We will continue to do the SIP everyday but there is a catch. We will keep 10 times of the SIP money as a cash. Now from the last brought price if the market goes down by 3% we will deploy 1 part of the lumpsum. In this way we don't have to predict the bottom or up in the market and will continue to do the SIP as well as invest more whenever the market goes down.
What if my money of lumpsum gets invested in the market. Then you have to start building the cash again and keep it aside for the lumpsum investment. In this way you will be double protected. Also you can book some profit when the Markey goes up to have that cash in your account to invest when the market goes down.
