What is SIP
(Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is a
disciplined investment approach. Through the SIP route, you invest a fixed
amount of money in mutual funds at regular intervals, monthly, quarterly or
even semi-annual basis. For example, if you decide to invest Rs. 2,000 per
month in a mutual fund through SIP, you should try and ensure that you transfer
the amount into the fund every month.
investing in SIP, and why should you invest in SIP?
There are several financial benefits for
investors when they choose to invest in mutual funds online through
SIPs. Here are a few important ones:
1. Rupee cost averaging when you invest through SIP, you don’t
have to worry about timing the market. SIP investments ensure that you purchase
more fund units when the market is low and lesser units when the market is
high; this is known as rupee cost averaging. It helps investors generate
relatively reasonable returns without worrying about market volatility.
2. Power of compounding Compounding is the process of earning
income on your principal investment plus the income earned.
3. Simple to invest Investing in mutual funds through
SIPs can be easy. When you decide the amount you wish to invest, merely provide
an auto-debit instruction to your bank account. This transfers the investment
amount directly to the fund.
4. Ideal tool for financial planning you may have various goals
you wish to achieve in life. For instance, you may have short-term goals like
travelling to all the eight wonders of the world in a single tour. On the other
hand, you could also have longer financial goals like buying a house or starting
your own business 10 years down the line. When you invest steadily in different
mutual funds, you can hope to achieve all your financial goals at the right
time in life.
invest in SIP?
If you are wondering how to start SIP, here
are three simple steps for you:
1. Identify a mutual fund for your
investment you can choose from several mutual funds in the market. Select a fund based
on your investment goals and risk appetite. Complete the KYC process and submit
an application form online or offline to us.
2. Choose the investment duration once you
select a `fund; you need to decide how long you wish to remain invested. The
duration could range anywhere between 6 months to 10 years, based on your investment
3. Invest regularly Select
a date you wish to invest every month. Investing through SIPs is a convenient and
straightforward method to create long-term wealth.