Difference between investing in a mutual fund and in an IPO

Investing in a

mutual fund

and investing in an initial public offering (IPO) of a company are two different things.

A mutual fund pool money from several investors and invests this in stocks, bonds, money market instruments and other types of securities. In

mutual funds

, you have option of investing a lump sum amount at once or you can opt for Systematic Investment Plan (SIP). You can start a mutual fund SIP from as low as Rs 500 a month.

An IPO is the very first sale of stock issued by a company to the public. The Company utilizes the fund generated through IPO to clear off debts, expand and improve their business or use it as a working capital. Investing in IPOs involves a lot of risk but also has the potential to give very high returns among other assets in the portfolio.

You can invest in mutual fund either through fund website or through Asset Management Companies (AMCs). To start investing in an IPO, you need to open demat cum trading account. A linked bank account and a PAN card are also required. You can also apply for IPO subscription directly from your bank account through net-banking.

READ MORE: What is a load or no-load fund?
What is mutual fund investment?
What is mutual fund?
Which is the best mutual fund to invest?
How to invest in a mutual fund?
How do mutual funds work?
What are the benefits of investing in mutual funds?
What are the different types of mutual funds?
What is mutual fund investment for beginners?
What is mutual funds and how to invest?
What are the mutual funds in India?
How is a mutual fund set up?
What is Net Asset Value (NAV) of a scheme?
What are sector specific funds/schemes?
What are tax saving schemes?
What is sales or repurchase or redemption price?
What is an assured return scheme?

Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.