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Mutual Fund investments
are treated as an easy and comfortable way of investing in

stocks by many investors. Professional experts, in the form of fund managers,
manage and operate mutual funds. Before investing in stocks they do all the
research and analysis of companies, their fundamentals, movement trends in the
stock price and future prospects. Based on the results, the fund managers select the
most suitable investment option.
An investor need not worry, beyond reason, about their money being
invested in the stock market through mutual funds. Their investments are
backed by a research team and a fund management team.
Since the money is invested in different assets for different investment
horizons, the risk of market movement reduces. With reduced risk, the loss
in one asset is off-set with profit from another asset in the portfolio.
An investor might not have the time or expertise to monitor and interpret
the movement in stocks. This is where the fund managers come to the
rescue, they take the correct decision at the correct time
Now that we know about the merit of investing in mutual funds , Let us see the
difference between SIP and mutual fund investment through lumpsum
investments method
Systematic Investment Plan SIP is a method of investment in a mutual fund
and not a product.
What is a Mutual Fund?
A mutual fund is a pool of money gathered from investors with an objective
of investing to achieve a common objective. The investments can be made
in various assets like equity, bonds, and money market instruments to earn
returns while achieving the stated objective.
It is professionally managed by an asset management company (AMC) and
each investor participates proportionally to the number of units held by him
or her.
A mutual fund is a type of investment vehicle that invests in either a
portfolio of stocks or bonds and other securities or a combination.
Mutual funds have the ability to give investors access to diversified,
professionally managed portfolios at a low price. These are categorized
based on the kinds of securities they invest in, their investment objectives,
and the type of returns.
They charge annual fees (called expense ratio and other charges in return
for the management of the fund on behalf of investors.
What is SIP?
A systematic investment plan SIP is a way of investing in mutual funds. It is
just a process through which you can contribute small but regular amounts
to invest in a mutual fund and build a good corpus over a period of time.
It brings discipline to investing a fixed amount on a regular basis like
weekly, monthly, or quarterly among investors. SIP helps an investor invest
in installments while keeping his/ her monthly income and expenses
planned and in sync
It is very important to start investing, even in smaller denominations.
Explore : SIP Calculator
What is lump sum investment?
Now that we know what SIP is, let us understand lump sum investment in
mutual fund as well.
SIP and the lumpsum investments are simply two ways to invest in a
mutual fund. In SIP investments a fixed amount is invested on a fixed
interval basis and in lump sum you invest in one shot
An investor with significant cash in hand can choose to invest in lump sum
mutual fund depending on the financial plan, investment goals, horizon.
Whereas an investor with periodic income can choose to invest in SIP
When you are investing in a mutual fund by paying a lump sum you get to
purchase all the units in a single transaction. For example, if you want to
invest Rs. 12,000 in the mutual fund scheme then you make one single
payment to complete the investment amount plan.
In the case of SIP, the same investment amount of Rs. 12,000 is spread
across 12 months, where you have the flexibility to purchase units by
investing Rs. 1000 every month.
So going by the above statement, SIP is not a product, type of investment
option or instrument in itself. It is just a process through which you can
contribute small but regular amounts to invest in a mutual fund and build a
good corpus over a period of time.
SIP is usually considered a good method if you have a long-term
investment goal.
explore our article on What is Cash Equity?
Difference between Mutual Fund and SIP
1. Investment Mode
While using SIP as a mode of investment you make regular payments to
purchase units of mutual funds. This inculcates the habit of investing
regularly.
2. Power of Compounding in SIP Investments
In SIP an investor invests in a disciplined way at a regular basis and
accumulates wealth over a period of time. SIP can be considered as a
better route to achieve the financial plan and investment goals.
Mutual funds provide an investor with an option either to reinvest the
earnings or returns. If instead of withdrawing an investor reinvests in the
same plan he can enjoy the benefits of power of compounding .
3. Flexibility
Through SIP investments you have higher flexibility, where you can invest
small amounts on a regular basis either weekly, fortnightly or monthly as
per your convenience. Hence SIP is best for salaried people or for persons
having regular cash flows.
SIPs allow you to invest in mutual funds without disturbing your present
lifestyle and expenditure pattern.
Lumpsum investment in a mutual fund scheme can be done generally
when f you have bulk surplus money.
4. Lower Cost
If you invest in SIP, you can benefit from cost averaging. This means that
you can lower the overall cost of purchase by buying more units when the
market is down and lesser units when the market is up.
This helps you to reduce your average cost of purchasing.
On the other hand in lump sum mode of investment, you end up purchasing
all the units at a price which can be higher as you do not get the benefit of
averaging.
5. Volatility
Investors, especially new ones are often confused about the best time to
enter the market. If you invest in a lump sum manner there is always the
question of timing the purchase and thus exposure to high volatility periods.
With a SIP, the purchase is spread over time and only some parts of your
entire investment will face higher than usual market volatility.
SIP Vs Mutual Fund
Parameters SIP Lump-sum Mutual Funds
Investment way Regular One time
Flexibility High Low
Cost Less due to rupee cost averaging High as the investment is done in a single transaction
Volatility Less impact More impact
Top Performing Mutual Funds for SIP in India

Below mentioned are the top performing mutual funds to invest through SIP
Fund Name Category
Canara Rob Bluechip Equity Fund-Reg(G) Large Cap Fund
IIFL Focused Equity Fund-Reg(G) Focused Fund
Parag Parikh Flexi Cap Fund-Reg(G) Flexi Cap Fund
Canara Rob Emerg Equities Fund-Reg(G) Large & Mid Cap
Nippon India Value Fund(G) Value Fund
DSP Tax Saver Fund-Reg(G) Tax Saving
Mirae Asset Tax Saver Fund Tax Saving
Conclusion
We hope this has helped you to understand the differences between SIP
and mutual fund investment. And now you will be able to evaluate when it
comes to SIP vs mutual funds
SIPs offer flexibility, lower cost due to averaging, and offer an effective way
to manage volatility. It’s simply a smarter way to invest.
While debating on SIP vs mutual funds, an investor must consider his/ her
convenience of investing based on income and earnings. You can use
Scripbox’s lumpsum calculator to get an estimate of wealth gained and
maturity value.

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Mutual Fund investments

are treated as an easy and comfortable way of investing in

Investment way Regular One time

Flexibility High Low

Volatility Less impact More impact

Top Performing Mutual Funds for SIP in India

Canara Rob Bluechip Equity Fund-Reg(G) Large Cap Fund

IIFL Focused Equity Fund-Reg(G) Focused Fund

Parag Parikh Flexi Cap Fund-Reg(G) Flexi Cap Fund

Canara Rob Emerg Equities Fund-Reg(G) Large & Mid Cap

Nippon India Value Fund(G) Value Fund

DSP Tax Saver Fund-Reg(G) Tax Saving

Mirae Asset Tax Saver Fund Tax Saving

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