A Systematic Investment Plan, also known as an SIP, is basically an investment method that allows you to invest small amounts regularly in the stock market for a predetermined period of time. And once the SIP tenure expires, you get to withdraw the total fund balance, including any returns on your investment and use them to further your financial goals. What’s even more advantageous is that you can quickly start an SIP onlinethrough your stock broker’s trading platform.
All said and done, what if you’re an investor who is interested in investing in tech stocks? Do SIPs actually invest in them? In this article, that’s exactly what we’re going to find out. Let’s begin.
What do SIPs invest in?
Now, let’s get to the technical aspects of a Systematic Investment Plan. Unlike mutual funds, which is an investment vehicle, an SIP is simply an investment method. And since it is just a way of investing, you retain complete freedom to choose the kind of stocks that you wish to invest in.
When opting for an SIP online, you’re typically asked to choose the investment amount, the tenure, and the kind of investments that you wish to make. Based on your financial goals, you can either choose to invest in individual stocks or mutual funds investments.
How do you invest in tech stocks via an SIP?
Since you have the freedom to choose where you wish to invest in, all that you would need to do is choose the right stocks or mutual funds to invest in at the time of opening the SIP.
So, if you wish to start an SIP in tech stocks, you can do it through either one of the following ways. You can either choose the individual tech stock in which you wish to invest in, or create your own basket of tech stocks, or opt for a tech-focused mutual fund. The choice is completely up to you. It is as simple as that.
What do you get by starting an SIP in tech stocks?
Starting an SIP online in tech stocks is by far and large one of the best ways to invest in them. Tech stocks are usually prone to high levels of volatility, which can be effectively managed by investing in an SIP. The consistent investments that you make at regular intervals in an SIP can help lower the cost of investment through rupee cost averaging. This gives you a greater chance of getting high returns in the long run.
Conclusion
Being a fully customisable method of investing, you can use the SIP way of investing to start investing in almost any kind of stocks or mutual funds including tech stocks. Now that you’re aware of the power of SIP, go ahead and start one right away. But before you do that, remember to first identify the best mutual funds to investin. This way, you can lower the chances of underperformance.
That said, to start an SIP online, you would need to have a demat account in your name. If you don’t have one already, simply get in touch with Motilal Oswal. You can open a demat accountright away for free.
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