Systematic Investment Planning (SIP)
A systematic investment plan (SIP) is an option where you
invest a fixed amount in a mutual fund at regular intervals. It could be
monthly or quarterly. The minimum investment amount in most mutual
funds is Rs 1,000 per month. The money may be transferred through ECS
with standing instructions also. Because it's systematic, a SIP helps
you plan for your long-term goals along with the short-term ones.
Disciplined & Regular Savings
A SIP is a disciplined investment plan and helps reduce
susceptibility to market fluctuations. It is a powerful tool that helps
you do cost averaging and allows you to benefit from market volatility,
which translates into substantial wealth creation in the long run.
Investors can select the tenure of investment according to their needs.
Usually, you should stay invested for a long enough period, so as to
maximise your returns.
Rupee Cost Averaging
When you buy more units at a lower price (when the market falls) and
lesser number of units at a higher price (when the market goes up),
you average out your investment costs. Suppose a monthly SIP is for Rs
10,000 and the fund's net asset value (NAV) is Rs 10. This will result
in 1,000 units being credited to you. However, next month, on account
of volatile market conditions , if the fund's NAV falls to Rs 5, you
will get 2,000 units. This will lower your average purchase cost. A
SIP helps you buy more when the stock market is falling and less when
it is rising.
A SIP is an excellent tool for investors to build wealth. There is no
need for a one-time lump sum investment. A regular investment pattern
helps build discipline in investors. You can go for a SIP according to
your goal - marriage of children, their education needs or your
retirement corpus. The 'rupee cost averaging' makes the market
fluctuations work for you.
Reach Your Financial Goal
This is a very convenient way of investing. You have to just submit
cheques along with the filled up enrolment form. The mutual fund will
deposit the cheques on the requested date and credit the units to
one's account and will send the confirmation for the same.
Small savings per month can become big amount over a period of time
due to compounding effect. This procees is called- Systematic
Investment plans (SIP). Check our calculator to know its power.