Systematic Investment Plan (SIP)

 

Systematic Investment Plan (SIP) 

What is Systematic Investment Plan (SIP)?

Systematic Investment Plan (SIP) is a best investment plan i.e. offered by Mutual Funds in which a person can invest a fixed amount in a Mutual Fund Scheme at certain regular intervals. It’s up to you whether you invest once a month or once a quarter. The instalment amount could be INR 500 a month. Nowadays SIP has been gaining popularity among Indian Mutual Fund investors. It helps people in investing in a disciplined and systematic manner without worrying about market volatility. Long term SIP has less market risk.

Systematic Investment Plans offered by Mutual Funds is the best way to enter the world of long term investments. Note: To get higher return it is very important to invest for the long term, which means that you should start investing at early stage, in order to maximize the end returns. Start investing early in SIP to get the best result out of your investments. Investing regularly ensures that the average purchase cost is evened out in the long term investment pr. It is well defined that when the markets rise, investors get fewer units, and when the markets fall, they receive more units.

People purchase a certain number of fund units corresponding to the amount they invested in SIP each time. You don’t need to wait for the markets ups and downs when investing through an SIP as you can benefit from both bullish and bearish market trends. When the markets are down, people usually purchase more funds while they purchase fewer units when the markets are surging. The Net Asset Value (NAV) of all mutual funds is updated on a daily basis, therefore the SIP cost of purchase may vary from one instalment to another. You don’t get profit when you invest a lump sum.

    Why to invest in SIP?

Everyone should invest in SIP mutual funds because it is the best and effective way to invest for long term goal. The concept of SIP is focused on the philosophy of “Save First, Spend Next”. You can invest small amounts at fixed intervals (weekly, monthly or quarterly) in SIP instead of making a one-time investment.

·         Power of Compounding

If you select the growth option when starting your SIP, then the returns would be added again to your investment amount that your investment generates. This ensures that you get a lot more returns as compared to a lump-sum investment. And this results in the compounding effect. SIP generates excellent returns in the long run. So, if you are also having a long-term financial goals, starting a SIP today in any scheme of your choice.

 

·         Start SIP with as low as Rs 500 a month

Most mutual fund schemes allow you to start investing with as low as Rs. 500 per month. SIP ensures that even youngsters who have recently started working can start investing to meet their future goals. Over the time, when you realize actually what the mutual funds are capable of, than you can increase amount of your monthly SIPs.

 

·         Become a disciplined investor

The main reason to invest in SIP is that it would make you disciplined investor in terms of managing your finances. Use automated payments for SIP, this will prevent you from the hassle of investing manually every month. Most investors start investing but fail. This happens when it comes to investing regularly. Regular investments are necessary to fulfill your financial objectives. An amount fixed by investors are automatically invested on due date in the scheme of your choice.

 

·         Acts as an Emergency Fund

One can stop SIPs at any time they are totally free to do so, and the fund house has no issue in this. You can redeem your SIP investment fund at any time. It is not necessary to make the SIP investment every month for any fixed duration, in case of an emergency; you can skip SIP payments for a few months, if you do not have funds to invest. You can skip or stop the SIP for a few months and start when you like.

 

·         Complete Transparency

The mutual fund industry has grown rapidly in last few years by leaps and bounds in India. AMFI and SEBI have introduced several stringent measures that every mutual fund scheme and AMC now needs to follow, just to protect the Investment interest of the investors. AMFI and SEBI has made SIP investment safe, easy and transparent for investors who are just starting their investment through SIPs.

 

SO Are YOU READY TO START A SIP?

Now when you know why to invest in SIP, it is time for you to start investing in Mutual Fund SIP as quickly as possible. Delaying to start investing will make it more difficult to achieve your financial objectives. So start it today.