SIP

SIP

What is SIP (Systematic Investment Plan)?

A Systematic Investment Plan (SIP) is a way to invest in mutual funds by regularly investing a fixed amount, like monthly or weekly, instead of putting in a large lump sum at once.

Think of SIP as a recurring deposit, but instead of keeping money in a bank, you are investing in mutual funds, which can grow faster over time.

Key Features of SIP

Why SIP is Popular

1. Disciplined Investment – You invest regularly without timing the market.

2. Power of Compounding – Your returns generate more returns over time.

3. Rupee Cost Averaging – You buy more units when prices are low and fewer when prices are high, balancing the cost automatically.

4. Low Starting Amount – You can start with as little as ₹500 per month.

5. No Market Timing Needed – You don’t need to predict highs or lows.

Example of SIP Growth

Imagine you invest ₹5,000 every month for 10 years, and the mutual fund grows at an average rate of 12% per year.

💡 In 10 years, you invested ₹6,00,000 but it grew to ₹11.6 lakhs — almost double — thanks to compounding!

How SIP Works – Flow

1. You Choose

   • SIP amount (e.g., ₹5,000/month)

   • Mutual fund scheme

   • Date of investment

2. Automatic Deduction

   • The amount is auto-debited from your bank account each month.

3. Units Allotted

   • Based on the NAV (Net Asset Value) of the mutual fund, units are credited to your account.

4. Value Growth

   • Over time, as NAV increases and your investment continues, wealth grows significantly.