New Delhi. Those who keep an eye on savings and investment news must have heard a lot of talk about SIP in the past few days. SIP stands for Systematic Investment Plan. In this you keep depositing some amount at a fixed interval. This money keeps accumulating. You keep getting these returns. With compounding over the years, your small investment becomes huge. This is the basic structure of SIP. Usually only mutual fund SIP is talked about. Today we will also tell you about stock SIP.
What is the difference between these two types of SIPs, which SIP is more beneficial and which one is less risky, will try to tell you about these three points. Let’s try to know details about them.
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What is Mutual Fund SIP?
You keep depositing money in a mutual fund at regular intervals. From here too, your money ultimately goes into stocks. If you want, you can diversify your portfolio as per your preference and choose which sector stocks to invest more money in. What happens is that when one stock is weak, another stock compensates. Mutual funds are managed by professional fund managers. So there is a sense of security here too.
What is Stock SIP?
In this case, no fund manager is looking after your money. You have to invest money in any one share at regular intervals. When the share price goes down, you buy more of it so that you can take advantage of cost averaging. However, stock SIPs have a huge impact when the market crashes.
what is good
Talking about risk, obviously there is more risk in stock SIP. Mutual fund SIP also has risk but it does not have much impact. But in terms of returns, stock SIP comes higher. Stock SIP can give you much higher returns than mutual fund SIP if the market is doing well.
(Disclaimer: The stocks mentioned here are for information purposes only. If you want to invest any money in them, consult a certified investment advisor first. News18 is not responsible for any profit or loss you may incur.)