Equity Mutual Fund Vs Debt Mutual Fund – how SIP works and what investors must consider while buying

In this edition of Money Guru, Zee Business brings to its viewers tips on how to invest in Mutual Funds. Mutual Funds investment can be mad ein equity mutual funds or debt mutual funds.

Mutual Funds Investments can be done in the form of a Systematic Investment Plan (SIP) or in a lumpsum manner. We tell you when it is advisable to take SIP route and when to take a lumpsum route. To tell you more on this, Viral Bhatt Founder of Money Mantra offers his views.

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Likening it to a bank’s recurring deposits, Bhatt said that MF investment via an SIP route can be made every month in pre-determined installments. SIP can also be weekly, quarterly half yearly and annually. It is deducted from your accounts.

It can be a very strong investment tool, he added.

He said that SIP could be done in debt and equity mutual funds. But it is beneficial in long term equity mutual funds, he added. It gives a greater benefit in terms of power of compounding, he further said.

It also offers a lot of flexibility. It can also be started with investments of just Rs 100.

If your financial goals are with a short term view, then debt mutual funds are beneficial, Bhatt further said.

While opting for SIP in equity mutual funds, power of compounding over a long period yields better results. The rupee-cost averaging also benefits over along term period. It also offers a lot of flexibility.

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