Is SIP a Mutual Fund? What is the difference between Mutual Funds Vs SIP? These were some of the questions I was asked by some one close to me and obviously not financially savvy.
I think SIP or Systematic Investment Plan have been marketed so well by mutual funds that it has been misunderstood by a lot many as a silver bullet of investment. This may be good for mutual fund business but not for investors. Some people think SIP is safe, SIP is Tax Free and SIP pays Interest. In this post we try to debunk and clarify some of the commonly misunderstood points of SIP.
What is SIP?
SIP stands for Systematic Investment Plan. As the name suggests its a “systematic” way of putting money in Mutual Funds. You can decide on a fixed date every month (quarter or even each working day), where the money is automatically deducted from your bank account and used to purchase mutual fund units. You can decide on the amount of investment, the fund you want to invest, the dates with some…