What is the difference between SIP and Mutual Fund?

What is SIP?
A person can invest a small amount in a Mutual Fund at regular intervals (monthly/quarterly) through SIP also known as Systematic Investment Plan.
SIP averages your investment cost over the investment duration and gives the flexibility of choosing your own amount and frequency, making it an ideal investment option for any investor.
How does it work?
• Every month/quarter a specific amount (decided by the investor at the start of SIP) is deducted from the investor’s bank account and invested in the chosen mutual fund scheme.
• Every time the amount is invested, units of the scheme (as per NAV) are allotted to the investor.
• Since your investment amount gets broken down in equal installments, your investments average out the market ups and downs resulting in averaging your cost.
• An investor can redeem (withdraw) units or switch out to another scheme anytime, he/she wishes to do so. (Please check the scheme related documents as some mutual funds would have a specified lock-in period.)
What is a mutual fund?
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature.
Mutual funds have advantages and disadvantages compared to direct investing in individual securities. Providing economies of scale is the primary advantage of mutual funds, a higher level of diversification, they provide liquidity and they are managed by professional investors. On the negative side, investors in a mutual fund must pay various fees and expenses.
Primary structures of mutual funds include open-end funds, unit investment trusts, and closed-end funds. Exchange-traded funds (ETFs) are open-end funds or unit investment trusts that trade on an exchange. Mutual Funds are also classified by their principal investments as money market funds, bond or fixed income funds, stock or equity funds, hybrid funds or other. Funds may also be categorized as index funds, which are passively managed funds that match the performance of an index or actively managed funds. Hedge funds are not Mutual Funds; hedge funds cannot be sold to the general public and are subject to different government regulations.
Me being an expert in this field as well as an experienced investor, I would highly recommend HDFC securities as they are the best in this business. If you’d like to invest in SIP or mutual funds you should click on the link below:

With the help of SIPs, you are investing in mutual funds. In other words, SIP is a tool by which you can invest in mutual funds. SIP is a method of mutual fund investment and not a type or comparable investment instrument. The other tool for investing in a mutual fund is a lump sum amount or one-time investment.


The article clearly explain about difference between SIP and Mutual Fund investment strategies. It will be help to new investors.

A Mutual Fund is a pool of assets in which you get proportionate proprietorship by obtaining units. Then again SIP is the strategy for putting resources into Mutual Fund.

In Mutual Fund the investment of cash should be possible in three portion -

  1. Debt mutual funds
  2. Equity Mutual Funds
  3. Hybrid Instrument - A mix of both equity and debt funds.

Where as SIP is represents Systematic Investment Plan which are viewed as the best method for investment.
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The SIP, on the other hand, is just a method of investing in a mutual fund. You can either reinvest in mutual fund as a lump sum or as a SIP. The SIP stands for Systematic Investment Planning. It allows you to invest systematically, and it could be weekly, monthly or quarterly based on your preference.

SIP stands for Systematic Investment Planning. It allows investing systematically i.e weekly, monthly or yearly.
SIP is a tool by which you can invest in Mutual Funds
SIP is a method of mutual funds investments.
A Mutual Fund is a financial instrument, which pools your money in the stock market.
To invest in Mutual Funds, there are two methods you can choose from. First lump sum amount & second through Systematic Investing Plan (SIP)
Lump-sum is a single large investment by an investor in a single time. Whereas a SIP is an option of investing a fixed sum in a mutual fund scheme regularly.
I hope you understand by now that SIP is not a different type of investment. It is just another.
You should consult a good mutual fund advisory services for better understanding of funds & start investing in mutual funds. You can easily access mutual funds by consulting Ajmera x-change. Ajmera x-change has experience and professional brokers that provide the right advice in a timely manner.