Know The Difference Between SIP VS Mutual Fund

SIP and mutual funds are similar yet serve different needs of an investor. We are here to tell you all about sip vs mutual funds so that you can make an informed decision about your next financial investment. Both options are popular investment modes to gain higher returns in the long run. SIP is a part of the mutual funds that allow you to invest money regularly whenever you want and gradually accumulate a corpus. 

Read on to understand the differences in detail.

Mutual Fund

A mutual fund is an investment in which authorized financial institutions, such as banks or asset management firms, gather money from clients and trade securities on their behalf to maximize profit while minimizing risk. Because the money is invested in diverse assets for various investment horizons, the risk of market fluctuations is decreased. When the risk is mitigated, a loss in one investment in the portfolio is compensated by a profit in another.

Benefits of Mutual Funds

Here are the benefits of investing in mutual funds

  • The main benefit of mutual fund investments is that they are managed by experienced analysts who research and select the best corporations to invest in.
  • Mutual funds are a viable option for people with large amounts of money ready for a one-time investment. It is also suitable for people who want to invest small amounts regularly. 
  • You can manage your risk by investing in various industries and companies, giving the investor a diversified portfolio. 
  • For expert investors, mutual funds allow them to find customized investment plans according to their investment needs.


A SIP or a systematic investment plan is a component of mutual funds. The main difference is that although mutual funds are often invested in lump sums, SIP invests a small amount in the fund on a recurrent basis. SIP even allows you to invest as little as Rs 500 per month or quarter. It is often preferred by beginners and can be a viable long-term investment option. Starting a SIP is extremely simple and eliminates the need to monitor interest rates since the investments are made regularly.

Benefits of SIP

The benefits of SIP are plenty. Read on to know more about some advantages of SIPs.

  • Since the SIPs are in open-ended funds, it lets you withdraw and deposit money whenever you want. 
  • Tax benefits are the biggest advantage for people who have been investing in SIPs for over a year. 
  • SIPs are beginner friendly since they are easy to start, and one can track their assets according to their convenience. 

What is the Difference Between a Sip And a Mutual Fund?

There are several differences between SIP and mutual funds, which must be kept in mind while investing. Some of the main distinctions are:

  • Payment: A mutual fund offers several payment methods, including one-time lump sum payment, while the SIP provides regular payments.
  • Cost: SIP allows you to profit through cost averaging. When the market is down, you can purchase more units and increase your purchasing value. In a lump sum investment, you obtain all the units at a greater price because cost averaging does not apply in this situation.
  • Flexibility: Mutual funds offer one-time investment options and periodical investment options. SIP offers periodical investment options like weekly, monthly, or quarterly and is thus preferred when income flow is consistent.
  • Volatility: A SIP is a low-impact investment method, while mutual funds are comparatively high-impact schemes.
  • Tenure: Minimum tenure of mutual funds is one day, and the maximum is limitless. While for SIPs, the minimum tenure is one day, and the maximum is three to five years.


Both mutual funds and SIPs offer a high investment return, but the final decision rests in your hands. Consider the SIP vs mutual fund comparison and choose the investment method that aligns with your financial goals, asset allocation, investment objectives, and risk profile.  


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