Systematic investment plan (SIP)

Systematic investment plan(SIP)

What is SIP ?

• A SIP is a way to invest in mutual funds where in a fixed sum of money is put into a mutual fund scheme at a specified date every month.
• It is considered to be investor friendly and an efficient manner of investing in the capital markets as one can start investing with small monthly contributions instead of first building a huge investment Corpus.
• It is a hassle free manner of investment as well since one can issue standing instructions to the bank for a specified amount to be transferred to the fund house/ distributor every month at a predetermined date.

How can one start a SIP ?

• There are two ways of starting an SIP. one can use the direct way of investing though the fund house or go through a distributor.
• For direct plans, an investor can go to the website of the fund house for the scheme in which the SIP has to be started.
• Typically, only the PAN and/ Aadhar is needed to open an account.
• Thereafter one can select the scheme, SIP amount, starting date and duration of SIp.
• If one opts for a distributor, then the same process can be done online on the distributor's portal.

Benefits of a sip:

• Timing the market is the most difficult thing when it comes to equity investment. SIPs in a way address this issue.
• SIPs capture every rise and fall of the market and hence, an investor need not worry about the level of the market.