What is SIP? How SIP Works?

Dr. Viibhor Agarwal

Just 5 minutes to invest in SIP

Systematic Investment Plan (SIP) gives you the opportunity to put a certain amount every month in your preferred Mutual Fund scheme.

SIP or Systematic Investment Plan is being searched most on Google. Many investors want to know about this method of investing in Mutual Funds. In the last few years, investment in SIPs through mutual funds has increased rapidly. If you also want to earn a good return on your savings, then we are telling you how you can easily invest in SIP.

Among these, there are investors who are already investing in SIP, but are not very clear about its status. Here we are presenting a quick guide of SIP for you. With its help, you will be able to know how you can also create wealth by using SIP in a Mutual Fund.

What is SIP?

SIP or Systematic Investment Plan gives you an opportunity to put a certain amount every month in your preferred Mutual Fund scheme. It is usually started in an Equity Mutual Fund.

Why start a SIP?

Discipline is very important in Mutual Fund investment. SIP maintains this discipline of yours. Apart from this, SIP continues to invest in Mutual Fund regularly whether the stock market is booming or slowing.

For example, if you have decided to put a fixed amount every month in a mutual fund scheme, then you will have to find time for it.

Secondly, if you take the time to invest in a Mutual Fund and if the stock market is weak or fast, then you feel that your investment should not be drowned and because of this you defer the decision.

SIP saves you from all these troubles and invests the pre-decided amount from your bank account in your preferred Mutual Fund scheme on the scheduled day.

The biggest thing is the benefit of compounding in it. If you invest in a Mutual Fund for a long period of time and earn returns, then you continue to get returns on this return also until you withdraw that amount. This helps you in the end to raise a large fund.

How SIP Works?

SIP has made investing in mutual funds easier. Because now, with the efforts of just once, every month the mutual fund gets invested in the fund scheme. Now let’s see how this works.

 

  1. To invest through SIP, you have to fill the investment form in mutual funds.

 

  1. In the form you choose SIP as the method of investment.

 

  1. In the same form, you have to give the mandate of auto-debt. This will automatically cut the fixed amount from your account every month.

 

  1. After submitting the form, the mutual fund fund company will withdraw the funds from your account on the due date.

 

  1. This amount will be used to buy units of the mutual fund scheme. Mutual fund fund units will be purchased at that day’s price.

 

  1. Since the price of a mutual fund, the fund unit has been changing every day, sometimes you will get a unit cheaply or sometimes in an expensive way. When it is available cheaply, the number of units will be more. If the unit is expensive then its number will be reduced.

 

  1. In this way you will continue to get mutual fund units at different prices.

What is the amount required to start a SIP?

You can start a SIP in a Mutual Fund scheme with just Rs 500 per month.

Can SIP be continued?

Yes Many SIPs (SIPs) are however started for a fixed period and a fixed amount is added every month, investors can customize the SIP according to their own. Many fund houses also allow the investor to invest on a monthly, fortnightly and fortnightly basis.

In SIP, the investor also has the option to increase or decrease the fixed amount. Through the Alert Sip (SIP), investors also get information in which the opportunity to invest more money is provided on the weakness of the stock market. In a long-term SIP (SIP), investors do not have to choose the expiration date. Once your investment target is met, you can close it by giving information to the fund house.

Special Features of SIP

If you want to understand SIP, then take care of recurring deposits. Because in it, a fixed amount has to be deposited at fixed intervals. However, interest rates in recurring deposits are also fixed. Let’s know about the features of SIP.

 

  1. You can invest a small amount every month.

 

  1. SIP can be done for any period above one year.

 

  1. The amount invested in it is decided in advance. It does not change.

 

  1. On the fixed date of every month, mutual fund companies withdraw a certain amount from your account.

 

  1. The process of withdrawing money from the account and buying a mutual fund fund unit is automatic.

 

  1. Since this is just an investment method, each month’s installment is a separate investment in itself.

 

What Did You Learn Today

We hope you guys have understood about SIP. We request all of you readers that you too should share this information in your neighborhood, relatives and friends, so that our awareness will be there and it will benefit everyone.

 

Fox Investor needs your support so that we can convey more new information to you. If you want any Mutual Fund SIP scheme consultancy then fill our contact us form now.

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