What is SIP (Systematic Investment Plan)?
For those who do not have much information about the stock market or share market, investing through SIP is a better way to reduce the risk of the investor. SIP is a method of investment and savings under which any investor keeps investing in a fixed amount in their shares or mutual fund. In simple words, it can be said that if you don’t have enough money to invest in one time then you can invest using SIP that enables you to move towards your goal monthly or for a fixed term. You can also invest in commodities like gold through SIP. SIP makes the investment easier and the investment continues in disciplined ways and also reduces the risk of investment.
SIP stands for the systematic investment plan. But I would like to call it a sort of investment plan. In an interval of equal time in SIP, an equal amount is invested in one item. An investor has Rs.50,000/- to invest and he does not want to invest them all on the same day due to risk factors. Now he can choose to invest in SIP for ten months at a rate of Rs.5,000/- per month that will also reduce the market risk for him.
Now a days, Banks also offer SIP through savings bank account. once you give them standing instructions they will continue deducting the SIP amount from your bank account directly and investing in the mutual fund on your behalf by their experts.
Features of SIP
- Any investor can invest in the share market, mutual fund or gold ETF through SIP.
- Investment intervals can be kept per day, per week or per month. This is an easy way of investing for salaried professionals.
- Large investments can be made in a regular and disciplined manner by saving some salaries every month.
- SIP can be started by giving an advance check in any mutual fund or giving online instructions.
- SIP can also be made from a small amount of Rs 500 per month.
Benefits of SIP
1. Small investment
It is easy to save a small amount for investment. For a long time, the investment of small amount can give you big returns.
2. Risk factors are less
Actually, when you invest a heavy amount at once and market goes down then think what will happen. SIP reduces such risks as the amount of money you save is not at one time.
3. Easy to invest.
As the investment in SIP can be done by directing online. On a fixed date the fixed amount is directly transferred to the mutual funds in which you have invested in your chosen plan.
At last from my point of view, If you want to invest in share market or mutual fund, you should go further with SIP. Whether you have a heavy amount with you or a small amount to invest. The market is full of ups and downs. one wrong decision can cost you a big loss and one good decision can make you earn a lot. So it’s all about our own sense think and think once again before making any investment.