Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to create wealth, by investing money in mutual funds.
SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.).
In simple terms, a SIP is a disciplined planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future. Benefits of SIP:
• Helps in taking advantage of Rupee Cost Averaging: It helps the investor to tide over the ups and downs of the market. In current situation where the Indian market is so volatile, the investors who have invested through SIP are least affected.
Lets understand how Rupee cost averaging works:
Average cost: Rs. 10.08/- (i.e. Rs. 30.25/3)
Average Investment per unit 1500/149= Rs. 10.06/-
Therefore, the gain is = Rs. 2.98 (i.e. (10.08-10.06)*149)
• Disciplined Investing: SIP develops a disciplined approach towards investing money since the amount to be invested is very small so it is easy for an investor to pull out few hundred rupee notes out of his monthly expense.
• Take advantage of power of compounding: The rule for compounding is simple - the sooner you start investing, the more time your money has to grow. Systematic investing has a compounding effect on your investments.
This story is from the April 2017 edition of Investors India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the April 2017 edition of Investors India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
ASK THE EXPERT
Ques. One of my friends told me that your company provides detailed Retirement plans. I want to know what is the procedure to get my Retirement plan. I will be retiring in March 2025. R.P Gupta, Noida
How to Naturally Reverse Fatty Liver Disease
The liver, located on the upper-right side of the abdomen, is the body’s largest internal organ and plays a critical role in detoxifying the blood and processing nutrients.
Banking sector which has underperformed in the last two years, now offers a favorable risk-reward profile
Do you think the market is overpriced? Is yes, should investors refrain from investing in index schemes at the current valuation?
India will continue to enjoy benefits of a close US relationship and trade will continue to grow
Q1. The US elections are said to be one of the closest till date, what impact will the election of a Republican / Democratic party have on the US economy and how is that going to affect India in the short as well as the long term?
Understanding Momentum Funds
Momentum funds are a type of investment fund that focuses on companies experiencing positive momentum in factors such as earnings, revenue, and stock price movement.
Risks and opportunities associated with Small Caps
Small-caps are a stock-picker’s paradise.
How to navigate your portfolio through bull market a
Indian equities have been in a bull run for the past four years.
Choosing mutual fund schemes depending on your age to achieve life goals
The choice of mutual fund (MF) scheme might be influenced by one’s risk profile or age.
Thematic Fund Or Sectoral Fund, Which Fund Suits You?
A thematic fund is a type of mutual fund that focuses on investing in companies based on specific themes or trends.
Be Kind To Your Kidneys
The kidney is a vital organ in our body which is four inches long and two and a half inches in width.
