All You Need to Know About SIP (Systematic Investment Plan)

A penny saved is a penny earned. And one of the best ways to save a portion of your monthly income is by making the right investments. While every investor could have a different style of investing, the safest option is to settle for an investment plan that assures decent returns at a relatively lower risk. And that’s where a Systematic Investment Plan (SIP) can be really helpful. So, what is SIP? What are its benefits? And how to invest in SIP? Below, we will shed light upon everything that you need to know about SIP. So, keep reading to learn about SIP – one of the finest investment instrument for creating long-term wealth at low risk.

What is SIP?

In simple words, a Systematic Investment Plan or SIP refers to a mode of investing in mutual funds in a systematic manner. The method of investing in SIP is similar to investing in a Recurring Deposit (RD) with a bank. The only difference is that, in the case of SIP, your money is invested in a mutual fund scheme (equity schemes or debt schemes) and not in a bank, and hence the investments are subject to market risks.

Before we proceed to understand how to invest in SIP, have a look at the various benefits of SIP investment:

What are the benefits of SIP?

The most common benefits of SIP investments are stated as under:

  1. SIPs are pocket-friendly

You don’t necessarily have to invest a large amount while making a SIP investment. With the help of SIP, you can easily invest a small amount at regular intervals as per your convenience.

  1. Helps you deal with market volatility

You don’t have to worry about short-term market fluctuations by investing in SIP. You must stay invested in SIP for a long term as it will not only help you generate wealth gradually, but also allow you to achieve your financial goals with ease.

  1. Ideal for investors with low-risk appetite

As compared to directly investing in the stock market, SIP has a lower risk associated with it. Moreover, you also get the option to decide the amount as well as the scheme you wish to invest in.

  1. Makes you financially disciplined

By opting for SIP, you would be keeping aside a portion of your salary or income regularly for investment purpose. This will help you become financially disciplined and organized. Moreover, you will be able to cut down on any undue expenditures and inculcate the habit of saving.

Now that you are aware of the various benefits of SIP investment, ensure to make the most of it by investing your hard-earned money wisely. Here’s a guide on how to invest in SIP.

Read on and start investing in SIP now!

Step 1: Evaluate your financial goals, risk appetite, and investment objective

Step 2: Decide whether you wish to opt for an online or offline method to invest in SIP

Step 3: Complete the KYC procedure

Step 4: Choose funds based on your risk appetite and expected returns, i.e. equity fund for high risk-high return, balanced funds for moderate risk-moderate returns, debt funds for low risk-low returns

Step 5: Set the SIP frequency (monthly, quarterly, half-yearly)

Step 6: Submit application and start investing

Investing in SIP is simple and can be highly rewarding in the long term. Whether you wish to buy a car, purchase a house, finance your kid’s higher education, or save for retirement, the money obtained through SIP investment can help fulfil financial goals with ease. So why wait? Plan your finances and start investing in SIP, today.