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.
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