SIP - Systematic Investment Plan


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What is a SIP?

Systematic Investment Plan or SIP is a disciplined way of investing where the investors invest a predetermined fixed amount of money on regular intervals. The frequency of investment may be weekly, monthly or quarterly. The term SIP is generally associated with investing in Equity Oriented Mutual Fund schemes on a monthly basis.

Systematic Investment Plan is a smart financial planning method that allows the investor to invest a certain amount of money on a specified date of each month which automatically generates a substantial yearly saving. The biggest USP of SIP is that it may be started with an amount as meagre as Rs.500 a month. This makes the SIP scheme accessible for all.

Advantages of a SIP

  • It is a hassle free investment as the amount may be auto debited from the investor's bank account.
  • Small investment amounts make it a pocket friendly procedure.

  • Regular investment makes it a disciplined process.
  • It is free from the need of "timing" the market.

  • Rupee Cost Averaging provides benefit from volatility.
  • Power of compounding gives the provision to amass a substantial amount of wealth from small investments over time.
  • It provides flexibility of investment period and amount of investment.