A mutual fund is like a money pool where many people invest together.
This pool is managed by a professional called a fund manager, who invests the money in things like:
Company shares (stocks)
Government bonds
Gold and other assets
Instead of you doing everything yourself, the mutual fund does it for you.
SIP is one of the smartest ways to invest regularly and build wealth over time. It allows you to invest a fixed amount in mutual funds every month, benefiting from the power of compounding and rupee cost averaging.
For goals that are flexible in timing — like buying a new car, planning a world tour, destination wedding, or purchasing a dream home — where a few months’ delay doesn’t affect the plan, mutual fund SIPs are ideal. They offer the potential for higher returns over the long term compared to traditional guaranteed plans.
However, for time-bound or fixed-date goals (such as child’s education or retirement), it’s better to invest in guaranteed or fixed-income plans that provide safety and predictability, even if returns are lower.