Lump Sum Investment — Mutual Fund Term Explained

Investing a large amount all at once, as opposed to via SIP. Better when markets are cheap; riskier at market peaks.

A lump sum investment means deploying a large amount in one go. While this maximizes immediate exposure to market returns, it also maximizes timing risk.

For investors with a large corpus to deploy, moving money gradually into equity via an STP reduces timing risk.

Related terms

• SIP (Systematic Investment Plan) — Investing a fixed amount in a mutual fund at regular intervals — typically monthly. Builds discipline and uses rupee cost averaging to reduce timing risk.
• STP (Systematic Transfer Plan) — Automatically transfer a fixed amount from one fund (liquid/debt) to another (equity) at regular intervals. Used to deploy a lump sum gradually.
• Rupee Cost Averaging — The benefit of investing a fixed amount regularly: you buy more units when NAV is low and fewer when high, reducing your average cost.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.