Stocks or SIP? Which gives more returns?
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Which is Better Stock or SIP?
Individuals can obtain stocks of a company either through IPOs, OTC, or stock trading and become a shareholder, which means, you are part of the company in framing the policies of the corporation. In a way your opinion will matter in the policy formulations.
Let us restrict our conversation to stocks, it is buying and selling of stocks in the stock markets. Whereas, the Systematic Investment Plan, SIP, is an investment method used in mutual funds. Individuals can make planned monthly investments in the funds that determine the portfolio and earn money to beat inflation.
You can make good returns on SIP investments and high returns on stock investments. In both, you can find a similarity, stock experts and mutual fund managers invest money in the stock markets. Stock investments can generate huge financial benefits by making different kinds of trading techniques like swing trading, intraday trading, futures and options trading and so on. In mutual funds, the fund managers put your investments in different portfolios to reduce the risk of losing money. You can expect a minimum profit of 20 to 40 percent on your investment per year.
Government allows SIP management in mutual funds and also encourages fund managers to enter into a management scheme that provides tax savings on your investments. This provision is not made available in stock markets.
In mutual funds, the fund manager gives you an option to invest in aggressively managed funds, and also issues you an authority to switch over your investments that suit your purpose. Shifting of funds from one zone to another can help you beat inflation values in the future. Your funds invested in the high risk zones can be managed by allotting it into less risk zones, from one portfolio to another where the chances of unit fund value changes from one portfolio stocks to another stock market.
However, you must select a monthly investment for short term /long term like 2 and above years. Mutual funds should have at least 7 to 10 years continuous flow of SIP every month.
Stock buyers/sellers must have the ability to bear the heavy loss that can incur at the time of busy business hours. SIP investments are relatively safer and establishes a comfort zone with the fund manager.