Imagine mutual fund as a type of pool: A pool where money comes from various different investors for investment in varied securities. This investment can be anything including market securities, shares, debt securities or their combination. In accordance with the fluctuating market, investors in mutual funds share both profits and losses that the securities are prone to.

Diversification of investment is the key element and this is the main reason why people prefer this kind of investment option. Mutual fund is a safe investment mainly because the management of this fund is done by professional services that understand the market and can make knowledgeable decisions. This minimizes the risks substantially. The initial costs of investing in mutual funds are quite low and this makes it a feasible option for everybody. There is full time monitoring of the process, which makes real time decision making.

Those who have long-term personal plans are better off with Systematic Investment Plan when considering investment options. It is necessary to understand that one-time payment option on the other hand does not give MF investors a high degree of benefits, since it does not take into account the fund downturn, which SIP plan does. No wonder Systematic Investment Plan becomes the preferred option when it comes to investing in a mutual fund of your choice. Systematic Investment Plan (SIP) is a way to invest in a mutual fund, which is opposite of the single premium option. Whether you want to own a car in the near future or keep money aside for the higher education of your child, it is easily possible through SIP.