What is Systematic Investment Plan and how to invest in SIP

What is SIP and how to invest in SIP ?

Systematic Investment Plan (SIP) is a method of investing in mutual funds.

Themain difference is that rather than investing a huge amount at one time,SIP invests in small amounts over a period of time.

What is the working procedure of SIP?

After applying for SIP ,the amount will debited from your account and invested in mutual funds that you have purchased.

After some moments,you will be alloted the units of mutual funds that you have purchased.

With every investment in SIP ,the additional units are added to your account according to the market value.

When to invest in SIP?

These investments can be started anytime having a minimum risk and a suitable plan.

Themore time you allow your money to be invested ,the more chances of your return.

So,there is no specific time for investing in SIP .

The sooner you invest ,more the chances you create for high benefits.

What are the types of SIPs?

Top up SIP

These plans allows to invest higher periodically when you have a higher income.

Flexible SIP

These plans allows investor to increase or decrease the amount he/she invested according to their needs.

Perpetual SIP

This SIP plan allows you to carry investment without any mandate date.

Therefore,the investor can withdraw the money whenever he wish to.

What are the benefits of investment in SIP?

It is the best option for investors who don’t have knowledge of investing in open markets as the money directly deducted from your bank account and invested in mutual funds.

In SIP, an investor can make maximum profits from market volatility.

Whenthe market is low,you can buy more units and lesser units when market is high.

Investing in small amounts can give a huge return after sometime.

So, investing in SIP is a disciplined and profitable way.

Written By Deepak Kumar ( Senior Analyst )

Also Read – Common myths about SIP

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