Systematic investment plan is a method of investing in mutual fund by investing a fixed sum regularly (monthly or quarterly), to buy units of a mutual fund scheme. It is an approach to invest within managed investments which involves investing a set of amount at regular intervals, rather than investing a large sum at a time.
Any salaried person or an individual who earns an income can choose SIP, as it is a best option of investing in long-term. There are many benefits of systematic investment plan and most often many people has included this type of investment in their budgeting plan for personal finance.
Benefits:
Rupee cost Averaging: Generally investors buy stocks when prices are low and sell them when prices are high. When you invest the same amount at regular intervals of time, you can reduce your average cost per share or per unit over time by buying more units when price is low and buying less units when price is high. This is called ‘Rupee Cost averaging’.
Grow your investments with compounded benefits: It is better to invest a small amount of money regularly from your savings, rather than investing at a time, to make a large investment. Your investment may not earn much interest while investing at a time. With SIP investment, every amount you invest grows through compounding benefits.
Small continuous payments make disciplined investments: SIP does not require a lump-sum investment at the best time. Just allocating a small portion of your savings into SIP, becomes the key to investing success, which makes the investor to invest regularly in a systematic manner.
The major benefit of SIP is that, it provides the opportunity for benefiting from market volatility and time in the market. So, choose SIP and start investing today.