What is better SIP or Lumpsum in falling market?

It is rightly pointed out by Warren Buffet that "one should be fearful when others are greedy and be greedy when others are fearful". This holds true in sense of what was happening from previous trading sessions. It had almost fallen by 8.86 per cent after making an all-time high of 40,267.62. So, in such a situation when you wish to enter the equity market by investing in equity mutual funds then you can either enter via SIP (Systematic Investment Plan) or lumpsum. So, let's find out which is the better option.

To illustrate it we have taken Sensex as the representative of equity mutual funds. Also, we assume that you are investing Rs. 12.6 lakhs (Rs. 10,000 x 126 months) lumpsum and Rs. 10,000 as SIP amount. The period of study is from February 2009 to July 2019. We have selected this period of study as we have assumed that you invest when the market is falling. February 2009 is the period when the Sensex was on its all-time low.

So, at the end of the period that is in July 2019 if you had invested via SIP then you have accumulated Rs. 21.34 lakhs and if you have invested via Lumpsum then you have accumulated Rs. 53.11 lakhs.

So, as you can see investing in lumpsum seems to be more attractive than investment in SIP. However, investing via SIP and lumpsum are the ways of investing which should be looked from a convenience perspective. If you have lumpsum available then invest via lumpsum. But in case if you don't have lumpsum amount available you can invest via SIP option.