Introduction
A Systematic Investment Plan (SIP) is a smart and hassle-free mode for investing money in mutual funds. SIP allows you to invest a pre-determined amount at regular intervals (weekly, monthly, or quarterly) in a selected mutual fund scheme.
How Does SIP Work?
When you start a monthly SIP, a fixed sum is auto-debited from your bank account on a chosen date and invested in a specific mutual fund scheme. You are allocated mutual fund units based on the Net Asset Value (NAV) of that scheme on that day.
The Core Benefits of SIP
- Disciplined Saving: Auto-debits force a habit of saving before you spend.
- Rupee Cost Averaging: You buy more units when markets are down and fewer when markets are high. No need to time the market.
- Power of Compounding: Small amounts invested over long horizons compound into massive corpuses.