Systematic Investment Plan
We are all investors
We may not always realize it, but every day, we are already investing—in our careers, our relationships, our children's future, and so many other things. The small efforts we make today shape a better tomorrow, just like the small, regular contributions in a Systematic Investment Plan (SIP).
So why not invest in your financial future too?
SIP in Mutual Funds is a simple, smart, and disciplined way to build wealth by investing small amounts consistently. While easy to start, it offers a range of benefits that can help you achieve your long-term financial goals.
What are Mutual Funds and SIP?
Mutual Funds pool money from multiple investors and invest it across diverse assets like stocks, bonds, and other securities to achieve a common financial goal. These funds are professionally managed by experienced Fund Managers, who analyze market trends, carefully select investments, and actively manage risks to optimize returns.
Systematic Investment Plan (SIP) is probably a retail investor’s best friend, as it allows you to invest small amounts regularly—daily, weekly, or monthly—in Mutual Funds, ensuring discipline, convenience, and long-term growth.
Benefits ofSIP
SIPs help you invest through market's ups and downs by averaging your investments, also known as rupee cost averaging.
Start with as little as ₹100 each month.
Have the freedom to choose the frequency as daily, weekly, fortnightly, monthly and quarterly.
Aim to beat inflation and create wealth in the long run.
SIPs bring financial discipline, by starting small you can build a habit of investing.
SIPs offer freedom from being on the constant look out for opportunities to time the market.
FAQs
Mutual Funds are investment vehicles that pool money from multiple investors to invest in various securities such as stocks, bonds, or a combination thereof, managed by professional Fund Managers. A Systematic Investment Plan (‘SIP’) is just one of the many methods of investing in a Mutual Fund scheme. In SIP a fixed amount (or as may be specified) is invested regularly into Mutual Funds, providing investors with disciplined and hassle free investing.
With SIP, because the amount invested in each instalment is fixed, you get more units when the NAV (Net Asset Value) of the Scheme, is low and you get less units when the NAV are high. This generally reduces the impact of market volatility in the long-term and is known as rupee cost averaging.
NAV stands for Net Asset Value. When you invest in any Mutual Fund Scheme, you are allotted units of that Scheme. NAV is net asset value of one unit in that Scheme. The NAV per unit is calculated by dividing the net assets of the scheme (Market/Fair Value of Investments + Current Assets - Current Liabilities and Provisions) by the number of units outstanding under that scheme.
Total number of units in the Mutual Fund scheme multiplied by the NAV is the AUM/Market Value of that Fund.
SIP top-up allows you to automatically increase your SIP amount (by Amount or specified %) at pre determined frequency. It aims to help your money to not only keep up with inflation but also grow in line with your increasing investing capacity over time without worrying about anything.
SWP is a feature offered by Mutual Funds that allows investors to regularly receive a predetermined amount of money at specified intervals as per the choice of the investors or the norms of the particular scheme, from their holdings in that Scheme. Unlike SIP (‘Systematic Investment Plan’), which involves regular investments, SWP involves periodic withdrawals and can take care of investor’s needs of regular cashflow.
It's an investment mode where you can regularly transfer a fixed amount of money from one Mutual Fund scheme to another Mutual Fund scheme within the same fund house. This strategy helps investors gradually move funds from a relatively safer asset class to a potentially higher return and risk asset class over time and vice versa, reducing the risk associated with timing the market.
There are many common mistakes that one must avoid to enjoy the full potential of SIPs. These include not having a goal or having an unrealistic goal, choosing the wrong scheme based on your risk profile and investment objective, not investing with discipline and stopping SIP when markets are volatile, not topping up your SIP, not reviewing your investments periodically and so on...
Compounding refers to benefit from earnings being reinvested to generate returns on original invested amount including returns generated over time, leading to potential exponential growth. Starting early, long-term investing and regular contributions are essential to fully benefit from the compounding effect.
Yes, SIP offers the option to pause or stop your SIP without any penal charges. However you may refer to the restriction on the number of times you can pause an SIP on the Mutual Funds's website .
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