Whether or not a systematic investment plan or mutual fund is superior depends upon your investor profile. Instead, it refers to an avenue via which it is possible to invest in them. While you might think of SIPs when you hear mutual funds, SIP doesn't refer to these funds. That said, you must always only invest as much as you can, keeping in mind your investment goals and threshold for risk. Investing early on and with frequency is important. Learn more about the markets, understand whether mutual funds are appropriate for you and, if so, whether lumpsum investments or SIPs are the right methods of investing for you on the Fi app. While a mutual fund can be thought of as an investment option, a SIP must be understood as a method via which to invest in a mutual fund. Final ThoughtsĪlthough the table above highlights the differences that exist between systematic investment plans and mutual funds, you must remember that these are two completely different concepts. ‍ Mutual Funds vs SIPĮxamine the table below in order to understand the differences between mutual funds and SIPs. Next, let's consider the differences between the two. Now you know the investment routes for an investment in a mutual fund - lumpsum vs SIP. This mutual fund investment method contrasts with lumpsum investments directed toward them. With SIPs, you can invest in instalments while continuing to manage your monthly income and expenses. Also, with Fi Money, it’s very easy to set up SIPs & invest in a mutual fund of your choice.īy regularising fixed contributions - be it weekly, monthly, or quarterly - investors are taught to be disciplined with their savings. You can invest INR 1000 monthly to purchase units as you move forward. SIPs allow investors to invest small amounts regularly in a mutual fund to build a good corpus over an extended period.įor instance, you can set up a SIP if you want to invest INR 15,000 in a mutual fund but want to make this investment across 15 months. ‍ Understanding a Systematic Investment PlanĪlso known by the acronym SIP, this plan provides investors with an alternate route to invest in mutual funds.

The next section helps make clear the SIP vs lumpsum mutual fund difference. Should lump sum investments in mutual funds not work for you, SIPs are worth considering. Instead of a lumpsum amount, an investor can purchase all the units they set their sight on in a single transaction.įor instance, if you wish to invest INR 15,000 in a single mutual fund scheme, you must make a one-time payment of this amount to finish the investment amount plan. This, however, requires an investor to have significant cash in hand. Mutual funds can be invested via lumpsum payments. Funds are classified in accordance with the securities they invest in, the returns they seek and the investment objectives they are linked to.

Investors get access to a professionally managed and diversified portfolio for an affordable price by investing in such a fund. Each investor’s participation in a fund is linked to the number of units they hold. Mutual funds are professionally managed under the supervision of Asset Management Companies (AMC). Often a mutual fund’s portfolio is either made up of bonds, stocks or a combination of the two. Securities that mutual funds most frequently invest in include money market instruments, bonds, and equity. This pool of money gets directed towards certain securities so that the fund’s investors can achieve a common objective. Defining a Mutual FundĪ mutual fund amasses a pool of money via its investors. Continue reading to understand mutual fund and SIP differences.

Owing to this fact, once I got the answers I was looking for, I compiled this information into what I hope is a helpful guide for those new to the markets.Ī simple fact to bear in mind, though, is that a Systematic Investment Plan (or SIP) merely serves as a method via which you can invest in a mutual fund. I was initially confused about how the two differed from one another. Have you ever thought about investing in the markets? If so, I’m sure you’ve pondered the difference between SIP and mutual fund offerings.

Mutual funds sip meaning