Tue. Sep 17th, 2019

SIP and its Benefits

3 min read

SIP( Systematic investment plan) is the way through which you can invest a fixed amount of money regularly in mutual fund schemes. In SIP the investor can select a period, interval and amount. After the interval of the selected period, the amount will be auto-debited from the account. With the increase in the participation of the retail investors, the SIP is also getting popular. But many investors still don’t know much about SIP.

Mutual Fund is the modern and professional technique that is controlled and managed by the highly professional investors who invest in the bonds and stocks, commodities, for example, valuable precious metals, and money market instrument. Funds like this are invested in a diverse class of assets, the main objective is an investment. This lets you get high growth prospects to the high growth perspectives. The small investment gives good growth progress this is all about mutual funds.

You can choose any SIP from:   

  • Amount based SIP
  • Quantity based SIP

Amount based SIP: In this type of SIP, a fixed amount decided by you is invested in your selected share.

Quantity based SIP: In this type of SIP the fixed quantity of shares of the company you wish is purchased.

Some benefits of SIP(Systematic investment plan)

There are many benefits of SIP which makes SIP fit for the equity market:

Small and regular investment: With SIP you can accomplish your higher financial goals even with a small investment. It helps you to invest the money as per your budget such as you can even start with small investments such as investing Rs 500 with periodic intervals. It is easy and very affordable to invest in mutual funds for investors.

Disciplined investment: Investors fail in maintaining the habit of investing money over some time. SIP is a system of investment in which an investor invests a specific amount regularly. Investment of small sum is an easier task than investing a huge amount every year.

Ease of investment: For the implementation of SIP there are two ways. You can follow any one of them: Online SIP and offline SIP. In offline mode, you have to fill a mandatory form. However, in online mode, you invest in SIP via online platforms by choosing the best sip to invest. Also, an online portal provides you with quicker transactions.

Automated process: Investors can choose automatic SIP deduction. Once you provide the bank your one-time mandate to your bank your money will automatically start getting invested in the scheme at the interval selected by you. This saves the investors from the hustle of form filling, cheques.

Power of compounding: the power of compounding helps in driving the investments ahead. SIP investments are very small and the investors can gain a lot with the power of compounding. Start investing as early as you can this will help you to gain higher returns.

Flexibility: The amount period and the interval of SIP is selected according to the convenience of the investors. Also, they can increase or decrease or they can even stop SIP when they want to do so.

Rupee cost averaging: Rupee cost averaging is an automatic timing mechanism. In SIP the value of the investment grows as the investments are made regularly and hence more units get bought and the market gets upward.

Thus if you are the one who is deciding to invest in a mutual fund, SIP is a very beneficial way to start with. Also with SIP, you can start by making small investments.

SIP you can accomplish your higher financial goals even with a small investment. It is easy and very affordable to invest in mutual funds for investors.

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