Mutual funds or SIP: Which is a Better Modern Investment Option?


A systematic investment plan is a mode of investment, whereas mutual funds are investment products. It is not possible to differentiate between these two. An individual can consider their convenience and hence select the suitable option for investment.   

The fundamental difference between SIP and Mutual funds  

A mutual fund is a process where funds are collected from many people and invested in specific financial instruments. Investors have the option to invest in secondary markets as well.

A range of mutual funds available can be categorized based on risk levels and goals associated with these funds. The aspect of risks is considered in the predetermined levels, and hence the aim is to achieve the objective related to the funds.  

On the other hand, SIP is an approach where the investors can invest or can avail themselves of the monthly or quarterly investment options. SIP allows the investors to invest in mutual funds as well.

Further, the amount to be invested can be as low as Rs 500, making it more accessible for the customers. SIP additionally allows the investors to invest in equity funds, and one can stop the investment process at any point in time.   

Unique benefits of SIP  

In the present-day scenario, savings is a serious concern among the new generation. One does not have the time or the energy to invest in banks to get the formalities to get an FD or a Recurring deposit. SIP has made it easier for people to support and experience great benefits on their terms.

SIP is comparatively less risky, and the investors can participate in great returns when comparing the risk aspect. Periodic investments allow the investors to be prepared for the investment process, and one can decide the amount of investment considering their ability to invest.  

It has gained popularity in the Indian market and an amount of Rs. Seven thousand five hundred crores are invested in India monthly. SIP staggers the investment for the entire financial year and helps to address the market volatility successfully.

It further provides a financial discipline in the investor’s life and keeps them prepared for any financial emergency in the future. It serves the purpose of saving money and hence investing inequity in a systematic way that helps to minimize the risks associated with it.  


SIP is a tool of investment and mutual fund, is an investment vehicle that exposes the user to bonds, stocks and other financial instruments. Both these aspects of assets are highly beneficial if used appropriately.

It is advisable to study the market and go through different online sites that help to compare the SIPs and the Mutual funds. SIP is beneficial primarily if one can invest the money for a long-term period. The risks associated with all the SIPs and Mutual funds can be compared to understand what is suitable for the investor.  

Further, it is necessary to keep yourself updated about the market. One may get disappointed to see that their money in the SIP or Mutual fund has not increased. It is important to maintain patience and not take arbitrary decisions based on a significant fall in the market.

Both these aspects allow the users to manage their finances directly without the influence of brokers, which makes it a time-efficient process. One can always consider consulting a professional before investing. However, it is always better to get it done independently.  

Poulami Sarkar
Poulami Sarkar
Statistics graduate, struggling with a sales job and a Data Science course.



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