Systematic Investment Plan (SIP) is an investment route which allows investors invest a fixed amount in a mutual fund scheme at regular intervals viz every week, month, quarterly or yearly.Key Features of SIP include:
Disciplined Investing
Rupee Cost Averaging Approach
Power of Compounding
Flexibility in the amount being invested every interval.
This disciplined method of investing via the SIP route helps the investor invests in a time-bound manner without worrying about the market dynamics.
SIP stands to benefit in the long-term due to two approaches it applies: 1. Rupee Cost Averaging and 2. Power of Compounding.In Rupee cost averaging approach implemented by SIP, one invests a fixed amount of money at regular intervals irrespective of whether the markets are going high or low. This ensures that investors buy more units when the markets are low and lesser units when they are high.By investing regularly through SIP and by investing for the long term, the benefits are magnified by the compounding effect. Compounding effect ensures that investor earns returns not only on the principal amount (actual investment) but also on the gains on the principal amount i.e. your money grows over time as the money you invest earns returns and the returns also keep earning returns.Due to any unforeseen circumstance if investor doesn't have the same amount of money to invest in a certain month or chosen time period or receives bonus amount sometime, SIP gives flexible option of changing the amount being invested without any fees.SIP is a great option for falling market. A downturn is the ideal time for SIPs to work in investors favour. SIP investments tend to work better in a fluctuating market scenario. As the market hits lows, resulting in a decline in a fund's NAV (Net Asset Value), one ends up buying more units of the fund at a lower price.One can start investing with as low as 500/- with SIP.Another major benefit of SIP is automated payments option - Once you give standing instructions to your bank, every month, a predetermined amount will automatically be deducted from your bank account for your SIP investment. This way you are free from keeping a tab.Before you start investing, know what are your investment goals viz Buying house/car. Saving up for marriage or children's education or studying abroad or retirement plans. Once you understand your goal you can then choose from many mutual funds schemes available.
If you’re looking at achieving your long-term goal, investing in equity funds can be a good option. For achieving short-term goals, you can invest in debt funds and money market funds. Always align your objectives with your risk-appetite before choosing the right plan.ForexOverFlow is an international team of Forex analysts and traders. Our goal is to share our knowledge of the Forex World. Forex is as large as the wild Amazon Jungle. Common people can benefit from our website, which we update daily in terms of technical analysis and fundamental analysis. We publish strategies that are simple and yet lucrative for manual traders. We are able to offer Mql4 or Mql5 platform development services. Meta trader 4 or 5 based indicators and expert advisors are available for users. Our developers' charges are fair and realistic.ForexOverFlow is here to bring a revolution to the educational forex industry which will make the masses well informed and well educated by just dedicating a few minutes a day.
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