Lumpsum investment means that you have ₹50000 or ₹ 500000 surplus and you want to invest at one go. With lumpsum Investment you can invest immediately and amount gets invested at one go.
Advantage of lumpsum investment is that you don't need to track Investment every month or maintain balance every month, as it has already been deducted from Bank account. If you have the temptation to invest a lump-sum amount to generate some substantial returns, then resist that temptation. The way to do that is to spread the investment over the next three to six months by doing a weekly SIP.
Assuming that you have five lakh rupees to invest and you want to invest now because you are thinking that the market has gone down and you have already identified that small-cap fund, still I would urge you to divide that money by 24 and invest 1/24 part every week. Although you will be able to win some and lose some by following this method of investing, it will make sure that you will never run away from investing in markets.
The problem of doing it at one go is that if you face a 20 per cent decline immediately after you have invested, you are very likely to lose your interest in investment, take your money out and then never invest due to the disappointment. A major part of our investment success does not depend on choosing the best fund or the best sector the small-cap. but it depends mainly on how you behave in the worst of times and the best of times.
We are humans and we will behave in a very natural, instinctive way of getting fearful or getting greedy on different occasions. So, you will have to devise a mechanism of dealing with yourself and the simplest mechanism to do it is averaging your investments methodically.
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