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SIP (SYSTEMATIC INVESTMENT PLAN) : INVESTMENT IN REGULAR INTERVALS

SIP is an investment tool which allows the investors to invest a fixed amount at regular intervals in any Mutual Fund Scheme. SIP works by investing a fixed amount at a definite frequency. With this, an investor does not need to time the market and can also invest in a hassle-free manner.

SIP has been gaining popularity among the investors of Mutual Fund, as SIP helps in investing in a disciplined manner without worrying about market volatility and timing the market. SIP offered by Mutual Funds are easily the best way to enter the world of investments for the long term. It is very important to invest for the long term which means that you should start investing early in order to maximize the end-returns. So, the motto, in this case, should be – “Start early, Invest Regularly to get the best out of your investments”.

SIP works on the basis of following two principles :

1)      Rupee-Cost averaging – SIPs can help one to escape the market volatility by eliminating the guessing game of market-performance. Regular investments ensure that the average purchase cost is evened out in the long run. When the markets rise, one will get fewer units and when the markets fall, one will receive more units. This process minimizes the risk, and ensures to acquire investments at a lower average cost per units.

2)      Compounding -  Saving a small sum of money regularly for long periods of time can have an exponential impact on your investment because of the effect of compounding.

Regular investments spread over longer durations to yield greater returns and profits.