A systematic investment plan (SIP) is a smart and automated tool to invest in mutual funds, where you can invest a fixed amount regularly. It allows you to start investing with small sums of money, You can begin with amounts as low as rupees 500. In the long term, SIP investments can help you fulfill the big dreams of your life by starting small with SIP.
Content:
- What is an SIP?
- Advantages Of SIP
- Power of compounding
- Flexibility
- How to start SIP
- Documents
What is a SIP?
A systematic investment plan (SIP) is a Highly popular automated investment facility to invest in Mutual Funds where you can automatically invest a fixed sum of money in a Mutual Fund at pre-specified intervals of time by simply giving a one-time instruction, it is similar to a recurring deposit where you save a fixed amount regularly for a period of time. These schemes have the potential to beat inflation and create wealth for you in the long term.
Advantages Of SIP
1.Flexibility
SIP gives you the flexibility to choose the amount you want to invest, The frequency of investing, the scheme you want to invest in, and the time you want to continue the SIP. You can invest either daily, monthly, or quarterly in the scheme of your choice based on your preference. You don’t need to wait till you have a large amount to invest through SIPS; you can start with an amount as small as rupees 500 a month.
2.Power of Compounding
SIP which continues for a longer period helps you to generate a very good return with the help of the power of compounding, small amounts invested keep adding up to create a large amount of money.
3.Rupee cost averaging
You don’t need to time the market with SIP, You invest regularly in mutual fund schemes irrespective of market ups and downs, as a result, the cost of purchase is averaged out over a period of time and you don’t need to worry about timing the market.
4. SIPs are Very Convenient
Investing through SIP is very convenient. The amount you choose to invest is auto-debited from your bank account at the predetermined frequency, So you do not need to worry about how to invest every month. SIP helps investors get the benefit of compounding and can build wealth in the long term.
How to Start SIP
KYC Registration:
To start a SIP first you need to get your KYC done, you can either speak to a financial advisor, walk into an investor service center, contact registrar and transfer agents like CAMS or KARVY, visit any nearest Mutual Funds office or visit any of the online platforms.
Required Documents:
You need the following documents with you to start with;
1. ID proof,
2. Address proof,
3. A passport size photograph, and
4. A Cancelled Cheque
Scheme & Frequency Selection:
After registering KYC you can select a scheme that suits your investment objectives and risk profile, And decide the amount, frequency, and time period of investment.
You can also stop the SIP anytime you want, and there are no penalties or charges to stop.
Disclaimer -: Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Happy Investing!!
