5/6/2023 0 Comments Sip definition itThe small amount you invest daily grows up to a large corpus due as a sum of your contribution and the returns compounded over the years. The automation makes sure your investment grows as opposed to lumpsum where you may forget to invest some time. Power Of Compounding: SIP is a disciplined way of investing and ensures you constantly strive to make your investments grow. ![]() So you can buy more units when the market is low and buy lesser units when the markets are high, lowering down your average cost per unit. The fixed amount you invest by means of SIP averages out the value of each unit. With SIP since your investment amount is constant, for a longer period of time, with rupee cost averaging you can take advantage of market volatility. The rupee cost averaging factor: With SIP comes the advantage of rupee cost averaging.Further, unlike lump sum investments, it ensures that you are working actively towards making your investments grow because of the periodicity. With SIP since the money gets auto-deducted from your account and goes to your mutual funds, you can sit back and relax. You do not have to spend your time analyzing the market movements or the right time to invest in. Makes you a disciplined investor: SIP can be the best investment option for you if you do not possess superior financial knowledge about the way market moves.There are several benefits of investing in SIP over Lumpsum. The investor can hence, withdraw the amount invested whenever he wishes or as per his financial goals. Generally, an SIP carries an end date after 1 Year, 3Years or 5 years of investment. This SIP Plan allows you to carry on the investments without an end to the mandate date. An investor can increase or decrease the amount to be invested as per his own cash flow needs or preferences. This also helps in making the most out of the investments by investing in the best and high performing funds at regular intervalsĪs the name suggests this SIP plan carries flexibility of amount you want to invest. This SIP allows you to increase your investment amount periodically giving you the flexibility to invest higher when you have a higher income or available amount to be invested. Types of Systematic Investment Plan (SIP)īelow are the types of Systematic Investment Plans: Hence, there is no suitable time frame within which an investor should start a SIP investment plan, the sooner the better. It is very important for the investor to choose the scheme which suits his long-term goals well. SIP investments can be started anytime ensuring minimum risk with the correct suitable scheme plan for the investor. This will continue till the time period When to invest in a SIP ? Then Rs 500 will be deducted from your account and auto-credited to the mutual fund you want to invest in, at a certain fixed date every month. You need to start an SIP of a set amount. Or you can choose to invest via a Systematic Investment Plan or SIP. Either you can make a one-time payment of Rs 1 Lakh in the mutual fund, also known as lump sum investment. Now there are two ways in which you can make this investment. Suppose you want to invest in a mutual fund and you have set aside a sum of 1 Lakh Rupees to invest in the same ![]() It is at the discretion of the investor to receive the returns at the end of the SIP’s tenure or at a periodic interval. With every investment, the amount being reinvested is larger and so is the return on those investments. With every investment in a SIP plan in India, additional units are added to your account depending on the market rate. At the end of the day, you will be allocated the units of mutual funds depending on the NAV of a mutual fund. Once you apply for one or more SIP plans, the amount is automatically debited from your bank account and invested in the mutual funds you have purchased at the predetermined time interval. SIP investment plan is about investing a small amount over time rather than investing one-time huge amount resulting in a higher return. ![]() Systematic Investment Plan (SIP) is a method of investing in mutual funds wherein an investor chooses a mutual fund scheme and invests a the fixed amount of his choice at fixed intervals.
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