SIP ( Systematic Investment Plan)

What is SIP (Systematic Investment Plan)?

The SIP is simply an investment mode i.e. a means to invest in mutual funds.

When an investor chooses to invest via an SIP, he makes investments (usually) in smaller denominations at regular time intervals as opposed to making a single lump sum investment. The intention is to benefit from the volatility in equity markets by lowering the average purchase cost. In this article, we discuss the pros and cons of SIP investing.

How SIP helps
The role of an SIP is to lower the average purchase cost of an investment over the long-term. Since the investment amount for each SIP installment is fixed, the investor gains by receiving a higher number of mutual fund units during lower NAV's of Funds and Lower number of mutual fund units during Higher NAV's of Funds.

SIP helps in the following ways:

Install Discipline of Saving in an Investor

Lighter On the Wallet for any month

Investor can start with a small amount ( No large money Required)

Helps to tide over the fluctuations in Volatile Market with ease

It makes the market time irrevelent

SIP Won't Deliver :

In Rising Markets

If SIP is Directionless

If SIP is in a Poorly Managed Funds