Systematic Investment Plan (SIP)

What is Systematic Investment Plan (SIP)?

A SIP is a vehicle offered by Mutual Funds which help investors invest regularly through a step by step approach to investing. It works just like recurring deposits with the bank or post office where you put in a small amount every month. The only difference is that in case of Mutual Funds it is invested in the market. The minimum amount to be invested can be as small as 100 and the frequency of investment is usually monthly or quarterly.

Benefits Of SIP

Habit Formation

Encourages disciplined saving and investing.

Flexibility

Easy to start, stop, or modify.

Wide Choice

Diverse range of funds and Asset Management Companies.

Convenience

Automated deductions from bank account.

Low Entry Point

Start with as little as Rs.100 per month.

Diversification

Spreads risk across various stocks and sectors.

Goal Achievement

Systematic savings for future goals like retirement, education, or marriage.

Free Insurance

Some schemes offer life insurance coverage.

Tax Savings

ELSS funds offer tax benefits under Section 80C.

Power of Compounding

Long-term benefits of compounding returns.

Rupee Cost Averaging

Reduces impact of market volatility.