March 15 2022 | Chit Funds |    VIEWS

Chit Funds or SIPS?

SIPs or Chit Funds

Chit Funds

There are a plethora of options in this world when it comes to saving. But there are only a few options available when it comes to saving wisely. 

Among these options, are two such tools that are the most popular in the Indian financial market. They are Chit Funds & SIPs. Both chit funds and SIPs encourage saving at regular & timely intervals which is great for bringing discipline to your saving capacity. While chit funds are the financial tool that is great for the dual need to borrow and save simultaneously, a Systematic Investment Plan (SIP) is merely an investment route for saving in mutual funds. 

A chit fund is a stellar financial instrument that can morph into the role you wish for your financial resource to play. If you are in dire need of money, it can become the bank you’d approach, for a loan by paying close to 0% interest. If you’re in the mind space to save, it can become the reserve you can work towards, for which you’ll be rewarded with an interest of 10% annually. The dual functions a registered & credible chit fund can play is the reason it is revered for. 

Now that we have a basic understanding of both forms of investment, let’s compare them to know which is better. 

1. The Value of Each Rupee

When it comes to SIPs, they are regarded for the principle of rupee cost averaging. This basically implies that SIP is a great approach towards investing in mutual funds as you will not be investing the entire amount you wish to invest in one shot. Instead, an SIP will give you the opportunity to invest a fixed amount every month. As the various installments made will be on varying values of the currency, it is noted that it will eventually average out, thus averaging the rupee cost for you, making it a lucrative investment.

Whereas when it comes to registered chit funds like myPaisaa, the value of the rupee does not come into context. As you’ll be investing or borrowing from your own savings, one does not comply with any kind of fluctuation in the chit fund market. 

2. Borrowing Aspect 

There are quite a lot of available saving tools in the market but when it comes to funding money immediately for your personal needs, one can only name a few. SIPs on the other hand have certain positive qualities that qualify them to serve as great investment tools but they do not facilitate borrowing.

This is where a registered chit fund like myPaisaa has the upper hand. When it comes to investing in chit funds, you can bid and borrow the entire chit value amount in the first month itself at an extremely low rate of interest. 

3. Market Performance

The vicissitudes of the stock market can sure sound exciting but it certainly does not provide that peace of mind as you will forever doubt the success of your investment. Thus, when you invest in mutual funds through SIPs or even otherwise you are signing up for braving the impact of the volatile financial market.

Whereas, the value of the chit fund you sign up for does not change its value till the end of the chit period, be it 10 months or 25 months. Especially, during the Covid pandemic last year, many stock market investors (apart from the ones who invested in IT/pharma industries) suffered huge losses. 

4. Time Value 

It is also said that the true potential or value of SIPs materializes only after an extended span of time. It is important to invest long-term to maximize the interest you derive from mutual funds through SIPs. Although, when it comes to registered chit funds like myPaisaa, you not only have the privilege to save according to the time span you wish i.e., from 10 months to 25 months, you can even fund from it as well! 

From all the angles above, I think we have a clear winner. Investing in a safe & trustworthy chit fund like myPaisaa which is registered can be far more beneficial than saving in mutual funds through SIPs. After all, the assurance and tranquility you receive from a reliable and stable market is always more than what you receive by investing in a rather unstable one. 


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