What is SIP?

Systematic Investment Plan (SIP) is a method of investing in mutual funds wherein investors choose a mutual fund scheme and invest a fixed amount on regular intervals like monthly, quarterly rather than investing lump sum amount.

SIP means investing small amounts at regular intervals rather than investing a huge amount one time.

How do SIPs work?

One should thoroughly research the best fit SIP plan for them

Selection of fund which suits their risk and return appetite

Finalising the frequency and the amount of SIP investment

Completion of KYC with the bank and auto debit function for uninterrupted investment

Types of SIPs

Perpetual SIP :

A perpetual SIP does not specify an end date for the investment. The investor can withdraw the amount whenever he/she wishes to fulfil their financial goals.

Flexible SIP :

A flexible SIP gives the investor the power to choose the amount he/she wishes to invest in the SIP at every instalment. An investor can increase and decrease the amount of investment as per the cash flow needs.

Top-up SIP :

A top-up SIP gives a leverage to investors to increase the amount of SIP investment periodically. It helps the investor in making the most out of his investment by investing in best-performing funds at regular intervals.

Benefits of Investing in SIP

Disciplined Investing:

SIP helps the investor to invest in a disciplined manner as the investor is bound to invest in a regular interval. The investor need not spend time analysing the market or the right time to invest.

Cost Effective:

SIP allows the investor to invest a small amount of money. Since the investment is divided into small portions, the impact of market volatility is significantly reduced.

Power of Compounding:

SIP is a disciplined way of investing. Since the investment is made at regular intervals over a long time, the returns generated also result in a higher return on investment. (ROI).