To find which one is best for investment ,Chit fund or mutual fund SIP 

                         we would l tell you about the main similarities and differences between chitties and mutual funds.


  • Both of these are not schemes that will get us  back a certain amount.

      For example, If you invest Rs 10,000 in a fixed deposit ,consider 9 % interest. After one year, you will get an interest of Rs 750 + Rs 10,000. So this is not a scheme that guarantees a guaranteed amount.

  •  If chit funds and mutual funds are in good Institutions, then very strict rules and regulations are followed.

     For  example, KSFE is based on the Chitty  laws of the Government of India. Almost all  chit companies operate that way. Mutual fund works in accordance with the regulation of the central government body called as a SEBI. These are schemes that  follow very strict rules.

  • These two teams are the kind of people who can fool money . Mutual fund will collect the money and invest in the stock or bond. Whoever wants the money  that month pay them and go ahead.


 Chit Funds

  •  It is a savings cum  borrowing scheme.       example: A few people get together and come to an agreement on how much money they can invest each month . That amount is invested every month. The amount picked up and  given to the needy people profit should be paid a little over the next month.
  •  Foreman collects  cash on the chit. If the foreman  collect the money and give it to the borrower’s security, the cash will be released soon.
  • Duration is fixed and cannot be withdrawn intermittently( 100 or 120 months).
  • The amount payable each month varies.
  • Chitty  is done by the region/ state/place people.
  • If  you want to get the money before the chief maturity, you have to pay the security .
  • It takes 2 to 8 weeks to get money from the chitty. Legal matters take time.
  • If  the stock market crashes, nothing can hurt the chit. Because it has no connection with the stock market.
  • The risk to the chit  manager is high.
  • Some chitties are bringing online, but 90 % are  offline or direct.
  • Chit Fund commission is 5%, if you take  for Rs 1 lakh, the chit manager gets Rs 5,000 per month.
  • The profit for a common customer of chit  is between 6.5 to 7 %.

 Mutual fund SIP

  • This is a long term plan to save and make a very large investment .
  • Mutual fund managers of the respective companies are collecting the money. They will have their own team. The team will research what stock and Bond it is and invest in whatever funds it receives. 
  • Its duration is not fixed. It is flexible . Long time duration can be added and can be withdrawn when needed.
  • Mutual SIP will have to pay the correct amount on the correct date.
  • Mutual fund is run by large asset Management companies.

 example : Reliance ,Nippon India, L and T ,SBI.

  •  It has more credibility than Chitty.
  •  If  you want to get the money before the maturity period, don’t  need to pay the security . 
  • Within 2- 5 days, you will get an amount from mutual fund SIP.
  • The up and down in the stock market is that in our mutual fund amount is varies.
  • The risk to the mutual fund manager is minimal.
  • It  is completely online .
  • Its commission is 0.1  – 3% .3 % for regular or broker  and direct mutual fund -1% .
  • The profit earned by a typical customer of mutual fund is over 10 percentage .
  • Growth perspective at  mutual fund than chit fund.

                    Chit Fund would be better, if you have a monthly closing system instead of a loan. It is not wise for the ordinary person to the way of a  future by amount chitty. Mutual fund would be better.

Leave a Comment