What are the Differences between SIP and Mutual Fund?

SIP or systematic investment plan and mutual funds are often considered as a synonym, and many people get confused whenever there are two options available to them, SIP and Mutual Funds. However, it is not true. Mutual Fund is a much broader term than SIP as SIP is just a way of investing in mutual funds.

Mutual funds are the instrument used to invest in different financial securities and help the investors to grow their money and accomplish their future goals. There are various methods of investing in mutual funds and SIP is just one of those methods and is not an entirely different investment plan. Mutual funds invest money in an investment in different stock options like equity, debts, bonds, government securities and a lot more. There is much difference between SIP and Mutual funds and some of these are listed below:

  • A mutual fund is a broader term as compared to SIP as it includes SIP as one of the methods of investing. On the other hand, SIP is just a part of the mutual fund and helps the investor to make systematic investments.
  • There are different investment options available in mutual funds like SIP, lump sum investment etc. that an investor can opt and earn huge profits, whereas SIP is an option in itself and let the investors make the regular investment over a period and help their money grow.
  • Mutual funds include different plans which can pace up the investment enhancement and can slow them too. There are many options with varying factors of risk and provide the investor with a pool of options to choose from. However, SIP is a systematic investment, and the money growth is slower than the others. However, it does not include much of the risk factor and is, therefore, a safer option to invest.

Therefore, this could be understood that Mutual fund and SIP are two different terms and SIP is just a way of investing money in the mutual fund and earn safer returns. Now you know what are the differences between sip and mutual fund.