In a systematic investment plan, or SIP, fixed amounts of your funds are regularly invested in a mutual fund based on your preference. This is possible with the linking of your mutual fund account to your bank account, from which preset amounts are deducted. However, before taking an investment decision, you should know the meaning of SIP and its advantages for you.
In case you have just started out as an investor, you may be exposed to various investment instruments, such as stocks, conventional mutual funds, bonds, commodities, etc. So why choose a SIP? Among SIP benefits, is the fact that a SIP allows you to invest according to the specific financial requirements you need met. If you are wondering how a SIP differs from a regular mutual fund, you should know that in a mutual fund you have to invest a lump sum amount. With a SIP, you can invest small amounts at intervals according to your financial capabilities. These amounts are predetermined and based on your ability to provide funds for your investment. You can invest as little as Rs.500 at a time in a SIP.
When you consider any investment of a financial nature, you should take informed decisions about your future actions. Hence, you should be well aware of the advantages you get with a SIP investment. It may interest you to read about the benefits of a SIP below:
If you want to learn how to invest in SIP, you should do some research at a brokerage like Motilal Oswal. Here, you can also open a Demat account and look through other fruitful ways to invest your funds so that you may see returns in the future.
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