Many people tend to mix up the terms SIP and mutual funds. But in reality, they are not the same. This confusion can lead to misunderstandings when it comes to investing. Therefore, it is important to understand the differences between the two.
Close your eyes and imagine embarking on a dream journey. You could end up at a breathtakingly beautiful destination. But the journey there can be quite difficult if you don’t choose the right path.
If your goal is to achieve financial freedom through mutual fund investments, you need to make sure you pick the right track. In this case, the best route to take would be the Systematic Investment Plan(SIP). With this method, you will be able to invest consistently and systematically which will help you reach your destination of financial freedom with ease.
The difference between SIP and mutual funds
Mutual funds
A mutual fund is an investment option that allows individuals to pool their money together and invest in a diverse range of securities such as bonds, equities etc.
By investing in a mutual fund, you can benefit from the expertise of professional fund managers who make investment decisions on your behalf. These fund managers analyze the market and select the most promising securities to invest in based on the investment objective of the fund.
Additionally, mutual funds offer you the opportunity to diversify your portfolio. With a diversified portfolio, you can invest in a variety of different securities. This helps to spread out the investment risk and minimizes the impact of market fluctuations on your investment.
Systematic investment plan (SIP)
While a mutual fund is an investment product instrument, Systematic Investment Plan (SIP) is a method of investing in mutual funds.
Through SIP, you can invest money systematically over time and create a corpus to meet your financial goals. SIP helps you to benefit from the power of compounding, as well as reduce the impact of market volatility on your investment.
With SIP, you will be able to invest small but regular amounts in a chosen scheme. You have the flexibility to select the frequency of your investments whether it be daily, weekly, monthly, fortnightly or yearly. Once you have chosen a frequency and date, the funds will be automatically debited from your bank account, making the investment process hassle-free.
Are you looking for investments?
Kashly team can help you start your mutual fund investments with the right assistance. signup here
SIP is a part of the mutual fund. It is a flexible and convenient way of beginning your journey in mutual fund investments. They can not be compared. Because a mutual fund is an investment product while SIP is a way of investing in it.
With patience and persistence, you can build a strong investment portfolio through SIP that will help you reach your financial goals and secure your future.
