(Last Updated: October 30, 2019)
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What is SIP in mutual funds? What are benefits of SIP investment?

  • SIP stands for Systematic Investment Plan, a quite popular term you shall hear in any discussion on investing in mutual funds. In fact, SIP in mutual funds has gained a lot of traction in the past few years that people are curious to know all about it.
    So, if you wish to invest small but regular amounts in a mutual funds scheme, SIP is the common way to do it. You can invest a fixed amount of your choice and set a specific date for investing your money monthly, bi-monthly or fortnightly.

    What are benefits of SIP investments or investing in SIP in mutual funds?

    • You can start regular investments even with a nominal amount like Rs.500-Rs.1000 as well. You don't have to worry of having a lumpsum to invest. Small but regular initial investments anyways help to accumulate a good corpus.
    • A financially disciplined life with regular savings and long term investment planning.
    • Explore better returns as compared to traditional alternatives. But, this is subject to market risks.
    • Earn through power of compounding and grow your money in a systematic manner.
    • You can also modify SIP amount on a periodic basis as per your convenience.
      If you are looking for disciplined investment options, starting an SIP might prove fruitful in the long run.

  • Mutual Funds is a popular investment option in India. Yes, I agree with the fact that small and regular investments are made by the SIP. You must have a good knowledge of this useful tool if you are a mutual fund investor. Thanks for posting this info folk!

  • @harleen SIP seems to be a disciplined way of investing. Nicely explained! We can start smaller amounts of SIP as per our convenience. This sounds very interesting. There is scope to earn better returns also as compared to other investment options like PPF or post office saving schemes.

  • Hi Kirti, Yes, SIP is surely a disciplined way of investing especially for the ones who wish to invest small amounts regularly. Traditional investment options are losing attractiveness since they are not giving requisite returns. So, people are looking for other ways of investing and earning better.

  • • You can begin with sip investment plan even with a notable sum like Rs.500-Rs.1000 also. You don't need to stress of having a lump sum to contribute.
    • Little yet standard starting speculations in any case help to aggregate a decent corpus. You can likewise change SIP sum on an intermittent premise according to your benefit.
    • Gain through the influence of aggravating and efficiently develop your cash.
    • Get complete information through site Kotak Mutual Funds.

  • @aaryabhaskar why only Kotak Mutual Fund, seems like you work for kotak mutual funds 🙂

  • @aaryabhaskar Is it possible to start investing with such a small amount like Rs.500 only? I thought one needs a good lump sum to start investing in such schemes. Is it possible to withdraw the amount invested easily from such mutual fund schemes? How much is the minimum lock-in period for it? Can you clarify on this. I have heard a lot about mutual funds. But, I am bit scared to put my money in risky things. Will it be safe to put my money in mutual funds? Please guide.

  • A SIP or a systematic investment plan is an investment avenue through which investors can invest a fixed amount regularly in mutual funds. The investment can made either in monthly, quarterly or yearly basis.

    The key benefits of an SIP investment are:

    1. SIP investment lets you leverage the benefits of compounding and rupee cost averaging
    2. It teaches you investment discipline
    3. SIP is a convenient form of investing because it allows you to invest even as little as Rs.500 on a periodic basis
    4. Also when you invest in SIP you don’t need to time the market

    In addition to that there are experienced fund managers to handle your investment.

  • @vikas_nair What I like best is that SIP can be started with a small amount like Rs.500 only. I can afford to put this much at least if that can give me better returns.

  • @harleen I am thinking of investing in mutual funds. Heard about SIP a lot. Thanks for these useful details. We can start SIP in mutual funds with a small amount like Rs.500-1000 monthly. This is really great. I was looking to invest but didn't have a lump sum to invest. I already have a PPF account. But, this time I want to invest in other options also.

  • Yes, you can invest small amounts in mutual funds. But, remember these investments are not risk free. You should invest as per your risk taking capability only. Otherwise stick to safe risk free investing options only.

  • @aaryabhaskar That sounds interesting, if one can start SIP with such a small amount like Rs.500 also. What if we miss an instalment? Are there any charges for the same? Do we need to contribute regularly once we opt for SIP plan? Any idea.

  • A SIP allows you to invest a pre-decided amount in a set of stocks or mutual funds/exchange-traded funds at regular intervals and beat market volatility by averaging out the costs. Prabhudas Lilladher offers you all the SIP instruments via its offices across the country.
    You can set up a SIP via your trading account or via a bank account, and buy a fixed number of shares/units for a defined number of periods. The shares/units are bought at the prevailing market rate at the time of SIP each period and keep adding to your account. You can choose to invest at any frequency-daily, weekly, fortnightly or monthly in the stock or mutual fund of your choice.
    Best funds to invest in for SIPs and often end up preferring the less volatile ones. While in fact, one should look at starting SIPs into more volatile ones. Or even in stocks for that matter. Therefore, one should go for SIPs in classy Midcap or Multicap funds depending on one’s horizon and risk appetite.

  • Systematic Investment Plan is an organized investment method that enables one to invest fixed amounts of money at regular intervals – usually weekly, monthly or quarterly. SIP usually deals with mutual funds investments.

    Popular equity-linked investment programs – such as the Equity Linked Savings Scheme (ELSS) – can be approached with SIP. Investing in ELSS by means of Systematic Investment Plan can be highly beneficial to the investor, not only in terms of the investment returns but also with regard to the tax exemptions on dividends for investment amounts up to INR 1,50,000/-.

    Some benefits of SIP are as follows:

    • Maximum benefits with minimum investment rates.

    • Reduced risk due to Rupee Cost Averaging.

    • Organized means of investing in instalments.

    • Effective from a long-term perspective.

    • Encourages investors to start investing early.

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