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SIP Investment-Mutual Funds

SIP is a Systematic Investment Plan that allows mutual funds to offer investors a way to invest in a controlled manner. An investor can use the SIP facility to invest a predetermined amount of money in a selected mutual fund scheme at predetermined intervals. You can invest as little as 500 Rupees, while the predefined intervals can be on a weekly/monthly/quarterly/semi-annually or annual basis. 

This method of investing allows the investor to invest in a time-bound fashion without worrying about market dynamics. This is a great way to reap the benefits of average costing and the power of compounding over the long term.

This allows one to invest a fixed amount in a Mutual Fund Scheme at regular intervals, say once a month or once per quarter, rather than making a lump sum investment. It is comparable to a regular deposit and can be as low as INR 500 per month. You can easily give your bank standing instructions for debiting the amount each month.

SIP is gaining popularity with Indian Mutual Funds investors. It allows for disciplined investing without worrying about market volatility or timing the markets. Mutual Funds offer systematic investment plans that are the best way to get into the world of long-term investments. It is important to invest long-term. This means you need to start investing early to maximise your returns. To get the most out of your investments, you should start early and invest regularly.


What is SIP?

It is a way to invest money. You invest a set amount of money over a period. You can purchase a set number of units from the fund with this amount. You can invest in the fund at the highs and the lows if you do this over a prolonged period. This means that you don`t have to time the market in order to make investments. Market timing can be risky as it is possible to invest at the wrong moment. This factor is eliminated by this method of investment.

After deciding on your investment term and frequency, you have the option to automate your investments. You can give your bank a standing instruction to transfer the money directly from your bank account to the mutual fund SIP you choose, at a fixed date each month (or quarter) etc.



Benefits of Investing in SIP 


The power of compounding

The compounding effect magnifies the benefits of investing regularly via SIP and investing for the long term. You will earn both the actual investment amount and the compounding effect, which means that you can also get returns on the principal amount. As the money you invest earns a return, your money will grow over time. The returns are also a source of returns.


How do you invest in SIP?

Before you start a SIP in any mutual fund scheme you should ensure that the objectives, risk levels, and tolerances of the scheme are compatible with your risk tolerance and profile. After you have determined that the mutual fund you want to invest in is right for you, you can start a SIP. A bank account is required to link your investment account with it. You can activate ECS and give your bank standing instructions for a deposit from your account to the mutual fund scheme you choose on predetermined dates. This will make it easy to invest in SIP. It is better to have investment advisor to choose a fund scheme specific for you and ask him to update regularly.


How do you stop a SIP from happening?

It is not advisable to end your SIP until you have reached your investment goal. Market movements should not influence your decision-making. You will get a higher return on your investment if you are more invested than you are. After you have made the decision to end a SIP you must inform the fund house. Logging in to the mutual fund investment account you have with the fund house and cancel your account. You can also go to a branch of the fund house to complete the cancellation form. You can call to your financial planner to cancel it, he will guide you.