People often find it difficult to differentiate between SIP and Mutual Funds. Mutual Funds are an investment product, whereas SIP is one of the ways to invest in mutual funds. Investing in SIP is investing in Mutual Funds.

What is SIP?

It’s the most famous method of investing in mutual funds. SIP is a disciplined investment method where a fixed amount of money is invested regularly. The biggest advantage is building a huge corpus by making small initial investments. It can generate higher returns than traditional investments like fixed deposits, PPF, etc. When you invest via SIP, you receive units of a mutual fund scheme; hence, when you regularly invest, you benefit from rupee cost averaging. That means you receive more units when prices are lower and lower units when the prices are high on the market. This way, SIP protects you from market volatility. You can also use a sip calculator online to help you decide. Investors can evaluate the possible returns on their Sip online over a given period with the help of this useful tool.

What is a Mutual Fund?

A mutual fund is a type of investment product that invests in a diverse portfolio of stocks, bonds, and other securities after pooling the money of several investors. The fund houses or asset management organizations (AMCs) establish mutual fund plans. Fund managers, known as reputable financial experts, manage these funds and make decisions on behalf of investors.

Investors favor mutual funds because of their various benefits. The flexibility of mutual funds is one of their strongest qualities; you can begin investing with as little as Rs 100 via SIP. Additionally, you can pay in full if you have extra money. You also benefit from liquidity, which allows you to return your money anytime. Your portfolio will diversify, allowing you to distribute the risk among different asset classes. 

Hence, understanding the differences between mutual funds and SIPs is essential for making wise investment choices. SIP stands out as a disciplined approach inside the Mutual Funds industry, even though Mutual Funds are an investment product. Whether opting for SIP or Mutual Funds, understanding their dynamics empowers investors to navigate the complex landscape of financial growth.