What is SIP (Systematic Investment Plan)#
Systematic Investment Plan, more commonly known as SIP, allows any investor to invest a pre-determined fixed amount in a mutual fund scheme at a regular interval.
It is similar to recurring deposits, in which a fixed investment is made on a regular basis. It is called Systematic Investment Plan or SIP because of its posture and systematic way of doing it on regular basis.
By taking SIP, any investor can invest in the market in a time bound manner without worrying much about the market dynamics and risk and can earn profits by investing for a long period. SIP
The Plan of Mutual Funds#
Rs 500 and Rs 1,000 as it enables people with a weak and medium budget to invest on a regular basis instead of a heavy, one-time investment .
You can invest some amount on weekly/ monthly/ quarterly/ semi-annually and annual basis under Pre-defined SIP Plan. Small Amount Investing through SIP may not sound attractive to you at first but it enables the small investor to inculcate the habit of saving and also helps you to do your money related goals and wealth generation.
Types of Systematic Investment Plan - Types of SIP:#
When it comes to SIP, many people limit SIP to only one plan due to lack of knowledge, while SIPs are mainly of four types:-#
Flexible SIP: #
Gives you the option to change the investment amount based on your cash flow.
Top-up SIP: #
This SIP allows you to increase your SIP amount during regular intervals.
Trigger SIP: #
You can set target based on pre-specified date, price, NAV.
Perpetual SIP: #
Permanent SIPs are those which are without any tenure or end date. Also read:➧ What is Demat Account? Learn About Demat Account!
Benefits of SIP Investment - Benefits of SIP Investing:#
Systematic Investment Plan is a method of building an investment portfolio by investing in a small SIP in mutual funds at regular intervals.
There are many benefits of investing in SIP, so let us know what are the benefits of SIP investment:-
- Disciplined Saving: Discipline is also necessary for any successful investment. By investing through SIP, you commit yourself to saving regularly and each investment takes you one step closer to reaching your financial objectives.
- Convenience: Investing through SIP is a hassle-free process. You can instruct your bank to facilitate auto-debit from your account. You can also visit the website of the fund house you are interested in and click on the link for SIP registration link/tab.
- Benefits of compounding: To make good and more money, the biggest requirement is that you start investing early and regularly. A small portion of the money invested regularly through SIP accumulates in a large amount, and grows rapidly.
- Rupee cost averaging:
If you choose to invest a fixed amount every month through SIP, you will see that more units or shares are bought when the price of the investment goes down. This reduces the average cost of purchasing a financial asset overtime.
- Diversification of Money:
When you invest in Mutual Funds through SIP
One of the biggest reasons for investing in this is that you get the benefit of diversification even if your investment is small. Thus, you isolate the risk of investing and get the most out of different mutual funds.
- Helps achieve life goals:
You keep certain objectives in mind while investing, such as buying a house, children's education, retirement, etc. Achieving your life goals in large amounts on small savings can be a daunting task. Through SIP, you can make a good and big savings over time by making regular investments.
What are SIP (Systematic Investment Plan) in this post today? go about this. I hope you liked this information on SIP Investment.#
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