Stock SIP vs Mutual Fund SIP: Meaning & Key Differences

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Stock SIP vs Mutual Fund SIP

Stock SIPs may be the ideal financial tool for you if you're not happy with the returns from ordinary SIPs and would like to go into something with a bigger potential for return. It is frequently confused with mutual fund SIPs, however the two are entirely different investment strategies. It is your responsibility as an investor to investigate the financial instruments you wish to use to make your investments in order to safeguard your capital and make ethical investments. Therefore, in order to facilitate your research, we have discussed the definition, advantages, and distinctions between stock and mutual fund SIPs.

While some investors find it difficult to make equities stock investments, others are dissatisfied with mutual fund SIPs on a monthly basis. SIP in equity shares intervenes in this situation. It is a systematic investment plan (SIP) that enables you to make recurring deposits of a defined amount or quantity according to your preference, just like any other SIP. The sole distinction is that you make equity share investments using this investment vehicle. Hence, you can divide your investments into smaller amounts and spread them out at regular periods rather than purchasing a huge number of shares all at once.

Key Features and Benefits of Stock SIP

Here are some of the main characteristics and advantages of stock SIP that you should be aware of before making an investment, in order to better grasp the idea.

  • Stock SIPs enable you to invest in equities shares and exchange-traded funds (ETFs), such as niftybees, autobees, and others, just like ordinary SIPs do.
  • It is a more appropriate investing mode for experienced investors since you have to select the stock after conducting research. If novice investors select the incorrect stock, they may wind up losing money.
  • It encourages you to buy stocks at regular intervals, which helps you develop a disciplined investing habit. You can opt to make the purchase on a weekly, monthly, or even quarterly basis, depending on what works best for you.
  • Certain stock market shares can be very pricey, making it impossible for you to buy a large number of them at once. With stock SIP, on the other hand, you can begin by deciding on a modest number of shares and then progressively raise it to suit your needs. It therefore allows you to begin modestly.
  • You can spread your risk over the duration of your investment because it is based on the rupee cost averaging strategy.
  • Your overall average cost of purchasing the entire number of shares decreases as a result of rupee cost averaging.
  • Make careful you use a stock SIP calculator to determine a stock's past SIP performance. These might assist you in providing an estimate of performance and return.

What is an investment in lump sum?

Now that we are familiar with SIPs, let's examine lump sum mutual fund investments as well. There are only two methods to invest in mutual funds: SIP and lumpsum. With lump sum investments, you make a single investment, whereas with SIP investments, a set amount is invested on a regular basis. Depending on their financial plan, investing objectives, and time horizon, an investor with a sizable amount of cash on hand may decide to invest in lump sum mutual funds. On the other hand, a periodic income investor may decide to invest in SIP. You can buy all the units in a mutual fund in one transaction when you invest with a lump sum payment. For instance, you would make a single payment to finish the investment amount plan if you wanted to invest Rs. 12,000 in the mutual fund scheme.

With SIP, you have the option to buy units by making monthly investments of Rs. 1000, with the same investment amount of Rs. 12,000 being spread over 12 months. Accordingly, SIP is not in and of itself a product, kind of investment choice, or instrument, as stated above. It's only a method via which you can invest in mutual funds and accumulate a respectable corpus by making little, consistent contributions.


Stock SIPs might be a wise investment option if you are confident in your abilities and know how to investigate the proper stocks. Nonetheless, mutual fund SIPs might be a better choice if you lack experience with stock market analysis and are unfamiliar with how the stock market operates. Before deciding on any one of the instruments, don't forget to evaluate their applicability and alignment with your objectives. You should also select a trading and investment software that keeps up with the quick-paced demands of the stock market in order to maximize your returns and make smarter investment judgments.