An SIP (systematic investment plan) allows investors to invest a fixed amount at regular intervals into a mutual fund. Primarily, SIPs or Systematic Investment plans are simply investing small amounts regularly.
The major benefits of an SIP are:
It is a flexible investment option for any investor as they are allowed to choose the amount to invest, frequency of the investment, and duration of the investment. It is a convenient solution for investors who do not have a lump sum capital ready in hand.
An investor can start investing with an amount as small as Rs.100/- per month.
It instils a disciplined habit of investment among individuals - where he or she will have to set aside a fixed sum of money for each day, week, month, or quarter, according to their chosen frequency.
Rupee cost averaging is another benefit of SIP investments. It helps you to average out the cost of your investment in Mutual Funds over time. The market volatility can be mitigated to some extent.
SIPs offer the power of compounding when an individual invests over a long period of time.
