Imagine you’re saving for a dream vacation. Instead of putting a big chunk of money aside at once, you decide to save a small amount every week. This consistent saving habit, over time, helps you achieve your goal. SIP works on the same principle.
Systematic Investment Plan (SIP) is a simple way to invest a fixed amount of money in a mutual fund scheme at regular intervals. This could be weekly, monthly, quarterly, or even annually.
You invest Rs. 1,000 when the Net Asset Value (NAV) is Rs. 100. You get 10 units.
Market dips. You invest Rs. 1,000 when the NAV is Rs. 90. You get 11.11 units.
Market recovers. You invest Rs. 1,000 when the NAV is Rs. 110. You get 9.09 units.
When the market is low, you get more units for your money. When the market is high, you get fewer units. This is called Rupee Cost Averaging. It helps reduce the impact of market volatility.
Disciplined Investing : It forces you to save regularly.
Power of Compounding : Your returns compound over time.
Professional Management : Experts manage your investments.
Flexibility : You can start small and increase your SIP amount.
Choose a Mutual Fund : Research and select a fund that aligns with your financial goals and risk tolerance.
Set Your SIP Amount : Decide how much you can invest regularly.
Choose Your SIP Frequency : Weekly, monthly, or quarterly, whatever suits you best.
Start Investing : Initiate your SIP through your bank, broker, or directly with the mutual fund house.
Remember : Consistency is key. Keep investing regularly, even during market fluctuations.
