System Investment Plan
What Does SIP Mean?
SIP or Systematic Investment Planning is a procedure that allows the investors to invest in mutual funds in terms of smaller but predetermined amounts of money over regular intervals (usually monthly or quarterly) throughout a definitive timeframe instead of a huge investment altogether. It is definitely one of the best ways to start investing for a beginner with less or no knowledge of investments at all, as it drives the entire investment into smaller parts and towards the best suited schemes in accordance to the current market scenario. Furthermore, SIPs are done in the open ended funds, thus ensuring that the investors get maximum liquidity options and withdraw their investments anytime they want.
The Benefits Of SIPs
Saves A Lot Of Time:
While there are some who prefer opting for stock options by giving in a more real time optimization approach for higher returns, most of the investors do not prefer it. Furthermore, real time optimization approach results in consuming a lot of the investors’ time (if not all) for regular update on the market standings and real time analysis. SIPs however, ensure that the investors do not need to invest much of their valuable time in order for higher returns.
More Returns On Early Initiation:
SIPs ensure that the investors get all the benefits of compounding. In other words, SIPs ensure that the investors get hefty returns if the investments are made regularly and from a rather young age. It guarantees that you end up with a substantial amount of wealth accumulated over years of savings topped with the
Rupee Cost Averaging:
Rupee Cost Averaging implies to a simple strategy of investment that completely eliminates the requirement to time the market. In simpler terms, this strategy ensure that one fetches more returns by simply investing a predetermined amount of money over regular intervals of time for a rather longer time frame. Since, the investment amount is fixed, one ends up buying more units in times of higher market price and lesser units in times of lower market price. This in turn ensures a lower average cost.