SIP vs Mutual Fund:A Comparative Analysis

By Gullak Team
Jan 18, 2023
6 min read
Mutual funds offer a diversified approach to portfolio building, while SIPs (Systematic Investment Plans) bring a disciplined, systematic method to investing in any asset. This article provides a clear breakdown of SIP vs mutual funds, dissecting their differences and potential benefits. We aim to equip you with the knowledge needed to navigate the SIP vs mutual funds difference. We will also discuss SIPs in Gullak Gold+, an asset that beats 90% of Mutual Funds in returns!

A Fundamental Overview of SIP vs Mutual Fund

To gain a thorough understanding of an SIP and mutual fund difference, it is important to first have a comprehensive idea of the concepts. Let's have a look:

1. SIP vs Mutual Funds - Understanding Mutual Funds:

Mutual funds are investment vehicles pooling money from several investors to buy a diversified portfolio of stocks, bonds, or other securities. Here are the specifics:
  • Equity Funds: Invest primarily in stocks, suitable for growth-oriented investors.
  • Debt Funds: Focus on bonds, preferred for lower risk and income generation.
  • Hybrid Funds: Mix of both stocks and bonds, offering balanced growth and income.
  • Managed by a fund manager who makes strategic investment decisions.
  • Performance is reflected in the Net Asset Value (NAV) of the fund.

2. SIP vs Mutual Funds - Understanding SIPs:

Systematic Investment Plans (SIPs) have emerged as a cornerstone strategy for modern investors, offering a disciplined and consistent approach to building wealth. Systematic Investment Plans (SIPs) are a method of investing in an asset, allowing regular contributions of a fixed amount. The asset could be a mutual fund, Gullak gold+ or any asset that allows the flexibility of SIP investment. SIPs help in rupee-cost averaging to beat market volatility & provide a disciplined approach to investments.

SIP vs Mutual Fund: SIPs in Gullak Gold+

Gold has been a preferable option among Indians, and rightly so given its profitable track record. To put this into context, gold generated 7.3% returns in 2018, 21.3% in 2019, 28% in 2020, 10.8% in 2022, and roughly 11.2% returns in the last 20 years in India. Gold has beaten NIFTY's returns 4 out of 5 times over the last 5 years.
Gullak Gold+ takes it one step further & gives investors an extra 5% return (in gold grams) every year on top of gold's annual returns of 11%. This makes the returns from Gullak Gold+ ~16% pa. The 16% from Gullak Gold+ beat returns from all other gold assets in India & even 90% Mutual Funds.

SIP vs Mutual Fund: SIPs in Different Assets

Now that we've established the difference of SIP vs Mutual Fund, let's take a look at which assets one should consider to start SIP investments.
Investing can often feel like navigating a maze, but with the right tools, it can become a path to financial prosperity.
ParameterSIP in Debt Mutual FundSIP in Gullak Gold+SIP in Gold ETF
Investment TypePeriodic Investment in DebtGold Leasing and investment in GoldExchange-Traded Fund in Gold
Risk LevelLowLowLow
Expected Annual Returns5-8%~16%Gold's CAGR(~11%pa)
Lock-inNo lock-inNo lock-inNo lock-in
SuitabilityIdeal for conservative investors seeking steady returnsGood for getting higher returns than majority Mutual Funds, while minimizing riskSuitable for investors looking to hedge against market volatility
Understanding these aspects is crucial when considering the debate of SIP vs mutual funds and determining which is better, SIP or Mutual Funds, based on individual financial goals and risk tolerance. The unique characteristics of Gullak Gold+ as an investment option simultaneously, particularly in terms of returns and risk profile, add an interesting dimension to the SIP vs mutual fund debate.

Conclusion: Final Thoughts on SIP vs Mutual Fund

In this thorough analysis of SIP vs mutual funds, we've unravelled the key aspects that differentiate these popular investment avenues. Understanding the difference between SIP and mutual funds is crucial in making informed financial decisions. Gold+ can be a handy investment option with the 16% projected annual returns if investors want a blend of high-return yet low-risk SIP.
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Frequently Asked Questions
How does investing in SIPs compare to mutual funds in terms of risk and return?
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How does Gullak Gold+ fit into my investment portfolio compared to SIPs and Mutual Funds?
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