A new concept of mutual funds was introduced to open new doors for investment in the stock market. However, this money pooling system has not minimized the risk factor. Therefore, it was still not advisable for the common person to invest their hard-earned money and face huge losses.

Considering said factors, a new option was incorporated, i.e., Systematic Investment Plan (SIP) wherein, an investor can invest a minimum amount regularly with the least risk of loss. This article shall pen down major concerns related to SIP like its features & benefits, next, how to choose a SIP. Lastly, the writer will try to compare investment in SIP with investment in mutual funds. With this crisp discussion, the write will sum up this article with their comments.

SIP: Structured Platform for Investment

Narrowing down the technicalities of the stock market and its mutual funds, SIP offered a window for petty investors to invest in mutual funds. By giving regular small contributions in mutual funds, SIP builds the best possible good corpus over fix duration of time. For making it simpler, its characteristics are enumerated below:

  • By doing a SIP, investors indirectly participate in the market;
  • As per their monetary limits and target; investors choose from available schemes and set dates for investing in the same;
  • Like Recurring Deposit (RD), the investor opts to deposit a specific amount deducted from the investor’s account at regular intervals for a set time (12months/2years, etc.).

Why SIP?

Focusing on above said features SIP with its disciplined framework has minimized the negative aspects of mutual funds, which make it convenient for the investors with the following benefits:

  • Customizing feature; an investor can fix the investment tenure or even investment interval, i.e., monthly/bi-monthly/fortnightly, etc.
  • Pocket friendly as an investor can even start from a bare minimum amount like Rs. 100/500/ 1000/-
  • No need for tracking the market volatility;
  • Higher possibility of returns than RD;
  • Simple operation as it functions just like any other savings;
  • Develop tendency of regular investment as saving;
  • Emergency piggy bank; if selected, SIP doesn’t have a lock-in period.

Going for SIP

Understanding the features/benefits of SIP, we will talk about; what can be the checklist or step-by-step procedure for choosing a SIP. A person with a fixed amount for investment at regular intervals can go for SIP without hassle. All the digital banks provide a list of the best SIP options; even they provide a SIP calculator which gives a rough idea about the whole investment. Most banking applications provide a facility for investing in SIP. Besides that, willing investors can also approach the bank and get proper guidance. Though internet and bank services are helpful, investors should be clear about their targeting goals which could help them in finalizing the duration and amount of SIP investment. An investor should also focus their risk tolerance capacity or opt for a SIP that carries minimum or no risk. Hence, criteria for selecting a SIP may vary from investor to investor.

SIP and Mutual Funds: Interconnection or Opposition

As SIP is the facility to invest in mutual funds indirectly, the master circle will be the same. Considering the whole concept of SIP it can be easily traced that it gives a platform to first-time investors. The hidden agenda of SIP is to allure investors to jump into the stock market game and increase the flow of money. So, the interconnection between SIP and mutual funds is quite clear, but it's dicey to conclude anything when it comes to the contradiction. 


In light of the above discussion, SIP could be considered a teaser of a blockbuster movie that features a hero and a villain in it. Living in a digital world, nobody can be left untouched by the virtual investment system by which investors can earn even while sleeping. However, it may also make the investor addicted, considering it a new game of gambling.

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