What is Systematic Investment Plan (SIP)?
SIP (Systematic Investment Plan) – is one of the most disciplined approach to investments in mutual funds. It lets you set aside a fixed sum of money at regular intervals (weekly, monthly, and quarterly) with an objective to generate capital appreciation in the longer run. SIP investment inculcates the habit of savings, the best way to save regularly without fail is to make your Salary Day as your SIP date.
For example, you can invest 5,000 in a mutual fund every month. It is a disciplined investment plan and helps reduce propensity to market fluctuations. It is a convenient tool that helps you preserve capital and also render significant wealth creation in the long-run.
SIP investments can help you reach your financial goals by taking advantage of rupee cost averaging, and growing your investments with compounded benefits.
Why should you invest in SIP?
Other than being a disciplined approach to investments, SIP investment also has its own advantages. One, it imparts financial discipline to your life. Two, it helps you to invest regularly without researching with market volatility, index level, etc. For example, if you are supposed to put a fixed amount every month in a mutual fund scheme, you need to find time to do it. When you have the time, you might be worried about market conditions and think of postponing your investments. Or you might be thinking of investing more if the mood is optimistic. SIP puts an end to all these predicaments.