What’s The Difference Between SIP and Mutual fund?

While you are putting in so much of effort in earning your money, are you deciding what are you going to do with all your money? The choices are very plain and simple. You can either leave it in your savings account to earn some percent of interest per year or you can invest it in a financial instrument which would give you advantages and returns higher than what you get from saving account. Yes, this is possible and it is no easy-money-making tactic but rather with the help of Mutual funds and Systematic investment plans you can actually save your money and also avail other benefits which might not be available on other saving instruments such as fixed deposit or saving account or recurring deposit.

To understand mutual funds, these are financial instruments, which club the money from you and other investors. This money is in turn invested in stock market, treasury bills, Corporate Bonds, Government Securities, Money Market instruments and so on. Some investors mix bonds and stocks for their investment to get maximum benefit at a lesser risk. With this your money is mobilized in the market and you get returns on your investment.

One such similar way to invest in Mutual fund is Systematic Investment Plan also called as SIP popularly. It is surely very efficient and also trouble free method to invest your hard earned money in mutual funds. Most of us think that SIP is an investment in itself, but actually it is a method to put the money in the mutual funds.

To know and understand the differences between a SIP and a Mutual fund, read on

Difference in definition

  1. Mutual Fund – It is basically consolidation of money from various investors and further invested into a number of shares
  2. SIP – Money initially invested in one go, is now split into convenient monthly, quarterly or yearly plans which then gets invested into a mutual fund.


  1. Mutual Fund – You basically invest your money in a mutual fund plan which is a kind of an investment
  2. SIP – Systematic investment plan is about a kind of way you can invest in mutual funds.

Amount of Investment 

  1. Mutual Fund – The amount invested in Mutual funds is generally huge and in lump sum and therefore not a very convenient option for people who have limited means
  2. SIP – You can invest with as little as INR 500/- per month for a long time in a SIP and over a period of time, can increase the amount as well.


  1. Mutual Fund – It is not affordable and convenient for middle class people.
  2. SIP – It is very much convenient and easy and affordable for people of every class.

Performance and Returns

  1. Mutual Funds – A lump sum investment is profitable only when equity markets are on a higher rise. It is because it creates great and massive returns on the investments.
  2. SIP –But when the stock market are highly instable, SIP is the safest option because of Rupee-Cost Averaging and Compounding factor. The investor buys less components of the asset when the value is high and more components when the market is low.


If you still do not have an investment plan then mutual funds and SIP are just the thing for you. It is a smart choice made by millennial these days. If stats have to be believed then there are more than a billion Indians who have invested in equity mutual funds. The investments done over longer term period is the simplest and effective method of making more money in the Indian market. SIP on the other hand is like a top-up as it takes the advantage of market volatility.

Think and choose wisely, if you want to invest in mutual fund or SIP but as a matter of fact, these are helpful in long term.

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