Systematic Investment Plan- SIP
Systematic Investment Plan (SIP) is the facility offered in mutual funds for investors to invest systematically on a regular basis. In a Mutual fund SIP, an investor can invest a fixed amount daily, monthly, or quarterly depending on the mutual fund scheme. The investment is made with a goal in mind. The goal may be to buy a house or children's education, vacation trip or just for retirement.
Power of compounding is the only lesson that one needs to learn for successful investing. Invest and what is earned on investment being reinvested along with fresh regular investment is nothing but an SIP.
You can begin SIP investment with a minimum of ₹500/ per month which is similar to the recurring deposit account of a bank. SIP is popular among mutual fund investors because it helps the investor to invest their available funds in a disciplined manner.
How does the SIP work?
The biggest advantage of the SIP investment is- it helps to invest in mutual funds without worrying about the market volatility and the market timings. The investor can choose the best fund for SIP and the fixed amount they want to invest regularly. Once the auto-debit instruction is given to the bank, the amount is deducted from the investor’s account on the pre-determined duration. This deducted amount is then invested in a mutual fund scheme.
Once the SIP amount is deducted from the bank account, the investor will be allocated the mutual fund units- depending on the NAV of the mutual fund. Additional units based on the market rate, are added to the investor’s account. At the end of a mutual fund scheme, the investment will yield returns.
Advantages/ Benefits of SIP investment
Mutual fund SIP offers the following benefits to the investors
- Discipline in investment
- Invest in a small amount
- Skip or Stop SIP anytime
- Invest any time- 24/7
- A safe and convenient way to invest in the equity market
- Save more with regular investment
SIP investment is very easy, flexible as well as secure for everyone. With the best mutual funds in India to invest in, one can start a SIP anytime with the minimum risk. For the investor, it is important to know about the scheme matching their long-term goals. Therefore, there’s no right or wrong time to start a SIP investment- the sooner the better.
Investor, from any corner of the country, has the option to begin online SIP investment. The question for them is- how to identify the best performing SIP and which product should SIP investment begin with? An investor must understand their financial goal and risk tolerance while selecting the best SIP plans.
How to Invest in SIP?
You need to open an SIP account with an intermediary or a mutual fund if you wish to invest in mutual funds SIP. A mandate needs to be registered with your bank so that a fixed sum is debited to your bank account and given to the intermediary for investment. You also need a Depository account to keep custody of the assets that you invest in.
Teach your children or grandchildren the power of compounding. This is the best knowledge that can be given for children, if practiced it will make children sensitive to importance of regular savings and investments.
Frequently Asked Questions- SIP
Identify the financial goal you want to achieve, analyze your risk tolerance capacity and then select the suitable mutual fund. You can choose the mutual funds based upon the type, fees, loads, size, etc.
You can talk to our experts on 022- 2858 4545 who will help you to choose the right SIP plan based on your requirement and the funds.
To enjoy the benefits it is advisable to stay invested in SIP for the long term. The process to start SIP investment is easy and simple.
Investmentz.com makes it easy for investors to start online SIP investments. To begin an online SIP investment, the investor has to complete the e-KYC process. Once the e-KYC is done, the bank will automatically debit the SIP amount from the account on the fixed date of every month.
Before any SIP investment, it is important to know about the SIP returns, liquidity, and safety. To decide in which product investor would like to start a SIP, go through the information and understand the risk appetite.
There’s no upper limit to the SIP investment. Either small or big amount, anyone can start a SIP from anywhere in the country. In general most of the Mutual Funds SIP starts with as low as Rs. 500/month.
It is highly recommendable for investors; even beginners to stay invested in the SIP for a longer time. However, there are certain SIP plans with a fixed minimum investment period of 6 months.
For some reason, if the investor requires to or has to exit from the SIP investment plan before the maturity period, then they have to send the notification to the bank and broker before the next SIP installment. For most SIP plans the investor must complete 6 months duration of the investment.
SIP is the safest method to invest in mutual funds. In case you invest in a mutual fund through the Lumpsum approach, depending on the market conditions, the chances are that you may end up paying a high price for the mutual fund. SIP investment is the ideal way to leverage the rupee cost to avoid paying an overvalued price for the mutual fund.
No, there are no additional charges levied to avail SIP facility in any of the investment product.
In order to track your investment returns and enjoy better investment plans, it is viable to invest through monthly SIP.
SIP is the method to invest in a mutual fund scheme. Mutual fund investment offers two methods to invest: SIP and Lumpsum. In Lumpsum you invest a large amount of money in the mutual fund scheme, in SIP you invest a smaller amount of money on the regular interval- on the fixed date of every month.