SIP vs Mutual Fund
Money is collected from several investors, combined and invested. MFs are handled by a fund manager, who is a financial markets and investments expert who does research before investing.
The investments can be made in various assets like equity, bonds, and money market instruments to earn returns while achieving a common objective among investors.
SIP or systematic investment plan is a method of investing and not a product itself. You can contribute small but regular amounts to invest in an MF and build a corpus over a period of time.
With a lump sum investment, you invest all your money in one shot.
SIP Benefits: Regularity
With a SIP, you make regular payments to purchase units of mutual funds. This inculcates the habit of investing regularly.
SIP Benefits: Compounding
Investment happens in a disciplined way at regular intervals and wealth accumulates over a period of time. It is a better path to achieve your investment goals.
SIP Benefits: Flexibility
SIP investments give you higher flexibility, where you can invest small amounts on a regular basis either weekly, fortnightly or monthly as per your convenience.
SIP Benefits: Lower Cost
SIPs give you the benefit of cost averaging. You can lower the overall cost of purchase by buying more units when the market is down and fewer units when the market is up.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.