What is a Systematic Investment Plan?
A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month, except the amount is invested in a mutual fund.
A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month, except the amount is invested in a mutual fund.
Benefits of Systematic Investment Plans
Rupee-Cost
Averaging
when the NAV is high the investor get lower unit and when the NAV is low the buyer get high unit.this is called rupee cost averaging
Power of Compounding
Albert Einstein once said, "Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't... pays it." The rule for compounding is simple - the sooner you start investing, the more time your money has to grow.
when the NAV is high the investor get lower unit and when the NAV is low the buyer get high unit.this is called rupee cost averaging
Power of Compounding
Albert Einstein once said, "Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't... pays it." The rule for compounding is simple - the sooner you start investing, the more time your money has to grow.
Disciplined Saving - Discipline is the
key to successful investments. When you invest through SIP, you commit yourself
to save regularly. Every investment is a step towards attaining your financial
objectives.
Flexibility - While it is advisable to continue SIP investments with a long-term perspective, there is no compulsion. Investors can discontinue the plan at any time. One can also increase/ decrease the amount being invested.
Long-Term Gains - Due to rupee-cost averaging and the power of compounding SIPs have the potential to deliver attractive returns over a long investment horizon.
Convenience - SIP is a hassle-free mode of investment. You can issue a standing instruction to your bank to facilitate auto-debits from your bank account.
procedure in SIP
Flexibility - While it is advisable to continue SIP investments with a long-term perspective, there is no compulsion. Investors can discontinue the plan at any time. One can also increase/ decrease the amount being invested.
Long-Term Gains - Due to rupee-cost averaging and the power of compounding SIPs have the potential to deliver attractive returns over a long investment horizon.
Convenience - SIP is a hassle-free mode of investment. You can issue a standing instruction to your bank to facilitate auto-debits from your bank account.
procedure in SIP
Ø
Initiating
an SIP requires the investor to choose the scheme, frequency, term, and amount
that he wants to invest in each instalment.
Ø
While
first-time investors need to fill the mutual fund application form, along with
the SIP enrolment form, the existing investors are required to fill only the
latter.
Ø
Information:
The investors need to furnish information such as SIP commencement date,
frequency of investment, investment period, , instalment amount and details of
payment
Ø
The
above documents should be submitted to the AMC office, branch or investor
service centre. The AMC usually takes 15-21 working days to process the
documents and initiate the SIP.
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