About SIP
An SIP (Systematic Investment Plan) is a Mutual Fund investment where an investor invests small sums of money over regular periods (say, weekly, monthly or quarterly).
Very few people have the time and expertise to invest in the stock market directly. Investing in stocks through the mutual fund route is therefore a very good option for such investors. Mutual fund investments can be done either in lump sum or in instalments.
Benefits of SIP
- Systematic way to achieve your long term goals
- Monthly instalments can ideally start from Rs. 1000/- per month
- Invest Rs. 2000 per month for 10 years, to see your capital grow to Rs. 4,64,678/- at an average return of 12% per year
- Rupee Cost Averaging - buy fewer units when the price is high and more when the price is low, thereby averaging the cost per unit
- Power of compounding - start early and earn much higher returns than someone starting out late even with a slightly higher corpus
- Reduce tax payout if you choose a Tax Savings Fund
- No tax on dividends received or capital gains for Equity Mutual Funds & Balanced Funds that are held for more than 1 year
- Stop at any time and redeem your units, unless you have chosen a Tax Savings Fund