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.

Benefits of 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.

How to 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 goals.

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.

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