In the field of mutual funds investment, the term SIP is a popular one, which abbreviates the term Systematic Investment Plan. The term refers to the monthly mode of contribution for your mutual fund schemes. Between the one-time payment and the monthly payment, most of the investors opt for the latter one. There are certain benefits of choosing a Systematic Investment Plan, which gives the investor the upper hand in many situations.
When the investor has chosen to invest in a mutual fund scheme through SIP, the system allows her to contribute a fixed amount of money in the said mutual fund or multiple mutual funds monthly. In this system, a fixed amount of money is deducted from the savings account of the investor that is directed to the said fund or funds that the investor has chosen for investing in.
Why SIP is the best choice?
Money is power. And investing money is a big decision that can any day go wrong for anyone. You would not want to waste your money on a bad investment ever. That is why SIP is the best option for investment.
SIP is a convenient way of investing money. It allows you to invest money on a periodical basis. You can choose a weekly or monthly scheme. Therefore, you do not have to invest the total money all at once. That way, SIP does not let you worry much about the invested money.
- Better power of compounding
There is also the added benefit of compound interest. So, what does the basic principle of compound interest imply? The small amount of money invested for a long time results in larger returns in comparison to any one-time investment.
- Small amount to start
Investment does not require you to be rich to make a smart move. If you know how sip works in the mutual fund, you might also know that SIP allows starting an investment with as low an amount as INR 500. Over time, you can increase the sum of your monthly investment by fifteen percent.
- Rupee cost average
This technical term is known to everyone familiar with the field of mutual funds. Investing money needs to be thought through. You would not want to untimely invest a lot of money. In the case of SIP, there is no need for you to judge the time for investing. If the market is down, you can buy more shares and if the market is high, you can buy less fund units.
- Benefits during an emergency
During a medical emergency you can get SIP money through the one-click withdrawal facility.
Investment of money is a big decision for anyone’s life, and everyone seeks to do that correctly. Consult your experts before investment as learn why SIP is a true companion for your investment journey.