Comparative Analysis of Systematic Investment Plan and Lump Sum Investment

The following article is a summary extract from the dissertation projects of the MA
and A
students of S!yline College" S!yline# situated in $elhi and %urgaon &'C() is a premier
institute providing management education specialising in MA and A degrees
and specialist courses for travel and tourism
as well as mass communication
" *or further information on the article content or on the institute please CLIC+ ,-(-
to visit the official college we.site" This dissertation was completed .y (eeti!a Tiwari
&/001
2
/030) on the topic Comparative Analysis of Systematic Investment Plan and Lump Sum
Investment
Summary
Mutual *unds over the years have gained immensely in their popularity" Apart from the
many advantages that investing in mutual funds provide li!e diversification# professional
management# the ease of investment process has proved to .e a major ena.ling factor"
,owever# with the introduction of innovative products# the world of mutual funds
nowadays has a lot to offer to its investors" 4ith the introduction of diverse options#
investors needs to choose a mutual fund that meets his ris! acceptance and his ris!
capacity levels and has similar investment o.jectives as the investor" Most importantly#
mutual funds provide ris! diversification5 diversification of a portfolio is amongst the
primary tenets of portfolio structuring# and a necessary one to reduce the level of ris!
assumed .y the portfolio holder" Most of us are not necessarily well 6ualified to apply the
theories of portfolio structuring to our holdings and hence would .e .etter off leaving that
to a professional" Mutual funds represent one such option" Lastly# -valuate past
performance# loo! for sta.ility and although past performance is no guarantee of future
performance# it is a useful way to assess how well or .adly a fund has performed in
comparison to its stated o.jectives and peer group" A good way to do this would .e to
identify the five .est performing funds &within your selected investment o.jectives) over
various periods# say 7 months# 8 months# one year# two years and three years" Shortlist
funds that appear in the top 9 in each of these time hori:ons as they would have thus
demonstrated their a.ility to .e not only good .ut also# consistent performers" SIP
and
Lump sum
are the two techni6ues 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 6uarterly as per the scheme" ut lump sum is paid only one time and the whole
transaction is .ased on this investing money" ;pting SIP# an investor can invest their
saving into it and can safe his money doing that" SIP is good .ecause if it seems that
mar!et will goes down in few days so an investor can safely withdraw his money and can
safe his money"
;.jectives5

<

To evaluate investment performance of selected mutual funds in terms of ris! and return"
<

To evaluate and create an ideal portfolio consisting the .est mutual fund schemes which
will earn highest possi.le returns and will minimi:e the ris!"
<

To analy:e the performance of mutual fund schemes on the .asis of various parameter"
(ecommendations5

Investment is the techni6ue .y which people save the money for future and increase their
living
standard" Many people who don=t !now and don=t want to ta!e more ris! .y investing in
shares
and securities therefore
Mutual *unds
are .etter instruments to save their money for future and provide them .etter return" SIP
and Lump sum are two techni6ues to invest money in mutual fund" People should not
confuse a.out them" oth are .etter themselves" 4hen mar!et is ups and down nature it
is .etter to invest their money through SIP another reason for SIP is .ecause it is monthly
investment so when there are salaried person who want to invest money in mutual fund
then
SIP is good techni6ue .ecause they have limited saving that=s why SIP is good for
salaried
persons"
4hen I surveyed in the mar!et there are many people who really don=t !now what
actually mutual fund means is" I reali:ed 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 availa.le > perhaps from a .onus at wor!"
The .enefit is that you are less li!ely to spend the money on other things? ,owever# if
you do not have a lump sum# you don@t have to save up until you have a large amount to
invest" Aou can invest a relatively small amount every month that can .uild up into a
worthwhile nest egg" If you set up a monthly savings plan# you will soon come to thin! of
your regular payment as an essential part of your .udget" 4hat@s more# you can .enefit
from a phenomenon !nown as Brupee cost averagingB# no matter how mar!ets are
performing5
<

If the mar!et goes up# the units you already own will increase in value"
<

If the mar!et goes down# your next payment will .uy more units"
Conclusions5

These two techni6ues are .etter themselves" People should consider .efore investing
money in
mutual fund and invest in good AMC" It doesn=t matter that SIP or Lump Sum will give
.etter
return" It all depends on fund manager and AMC" SIP is a mean not an end" Investors
would do well to reali:e that the SIP is means for achieving
one=s financial goal and not an end .y itself" An investment in a poorly managed fund
remains
just that irrespective of the investment mode i"e" lump sum or SIP" ,ence investors first
select a well managed fund which has a trac! record to show for" M
any 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
.efore investment" According to survey# 7CD people say that Lump Sum is good
techni6ue for investment and on the other hand# 88D 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" ut apart from that people also depend on the mar!et and they ta!e 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 !ind of investment
.ecause they thin! that this type of investment can divert their mind from their .usiness"
Some people invest money through Lump Sum at once" So they can concentrate more
their .usiness or activities etc" So the outcomes of this survey is that people invest money
in mutual fund .y .oth techni6ues# SIP and Lump Sum .ut some time investor is in more
profita.le and some not its depends on mar!et fluctuation"
Limitations5

Ther
e are some pro.lems 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
li!e a gam.ling and some people says that investing in mutual fund is same as investing
in share mar!et" I surveyed this when share mar!et was very down and day .y day it was
going down and down so people were hesitating to invest in mutual fund" These all things
are happen when there is lac! of proper advertising" People have good !nowledge of
insurance and other things than mutual fund" So first thing is that people should
aware these all things they even don=t !now the terms and glossary"

Consumer ehavior towards Mutual *unds and Systematic Investment Plan &Sip) In the
Case Study of SI Mutual *unds
The following article is a summary extract from the dissertation projects of the MA
and A
students of S!yline College" S!yline# situated in $elhi and %urgaon &'C() is a premier
institute providing management education specialising in MA and A degrees
and specialist courses for travel and tourism
as well as mass communication
" *or further information on the article content or on the institute please CLIC+ ,-(-
to visit the official college we.site" This dissertation was completed .y (ahul %upta
&/00E
2
/00F) on the topic Consumer ehavior towards Mutual *unds and Systematic
Investment Plan &Sip) In the Case Study of SI Mutual *unds
Summary
This project has .een a great learning experience for meG at the same time it gave me
enough scope to implement my analytical a.ility" This project as a whole can .e divided
into two parts5
<

The first part gives an insight a.out the mutual funds and its various aspects" ;ne can
have a .rief !nowledge a.out mutual funds and all its .asics through the project" ;ther
than that the real servings come when one moves ahead" Some of the most interesting
6uestions regarding mutual funds have .een covered" Some of them are5 why has it
.ecome one of the largest financial intermediariesH ,ow investors do chose .etween
fundsH Most popular stoc!s among fund managers# most lucrative sectors for fund
managers# a special report on Systematic Investment Plan# does fund performance
persists and the topping of all the servings in the form of portfolio analysis tool and its
application"
o

All the topics have .een covered in a very systematic way" The language has .een !ept
simple so that even a layman could understand" All the datas have .een well analy:ed
with the help of charts and graphs"
<

The second part consists of data=s and their analysis# collected through a survey done on
330 people" It covers the topic I
Consumer .ehavior towards mutual funds and systematic investment plan
&SIP)J
" The data collected has .een well organi:ed and presented" ,ope the research findings
and conclusions will .e of use"
;.jective5

<

To identify the consumer .ehavior towards mutual funds"
<

To develop model portfolios .ased on clients profile and re6uirements"

<

To identify the consumer .uying process of mutual funds"
<

To identify the factors which influence the customers to purchase mutual funds"
<

To identify the match .etween company=s strategy to sell the mutual funds and
customers re6uirement"
<

To do a comparative analysis .etween Lump sum investments K Systematic Investment
plan"
<

To give recommendation to the company on the .asis of study for future course of action"
(ecommendations5

<

There should .e an effective communication .etween the mutual fund seller and
purchaser"
<

Timely advises should .e provided to the investor"
<

Investor should .e made reali:ed that if he is not investing in mutual funds now what he
is losing for the future"
<

Should .e made aware of the .enefits"
<

The advisors should target for more and more young investors"
<

The advisors may try to highlight some of the value added .enefits of M*s such as tax
.enefit# rupee cost averaging# and systematic transfer plan# re.alancing etc" these .enefits
are not offered .y other options singlehandedly" So these are enough to drive the
investors towards mutual funds"
<

Investors could also try to increase the spectrum of services offered"
<

The advisors should try to charge a nominal fee at the .eginning" ut if not possi.le then
they could go for offering more services and .enefits at the existing rate" <

They should also maintain their decency and follow the code of ethics so that the
investors could trust upon them"
<

The advisors should try to attract more and more persons and turn them into investors and
finally their clients"
Conclusions5

After analy:ing the data we can say that a Mutual *und is the most suita.le investment
for the common man as it offers an opportunity to invest in a diversified# professionally
managed .as!et of securities at a relatively low cost" There is enough scope for the
investors to invest money in mutual funds for the longer returns with a lesser ris! factor"