How Does SIP Work?
When you start a monthly SIP, a pre-decided sum is auto-debited from your bank account on a chosen date and directed to your mutual fund scheme. Based on the Net Asset Value (NAV) of the fund on that day, you are allocated units.
Rupee Cost Averaging in Action
When the market falls, the NAV decreases, allowing your fixed SIP amount to purchase more units. When the market rises, the NAV increases, purchasing fewer units. Over time, this averages out your cost per unit.