Systematic Investment Plan
What is Systematic Investment Plan? What is its purpose? In our modern society there are many investment tools are available, but we do not know much about them.
These tools are able to counter the effects of Inflation. We only know and use traditional ways of investment like fixed deposits and insurance.
Today I am going to answer these and many more Questions like this in this article.
These tools are able to counter the effects of Inflation. We only know and use traditional ways of investment like fixed deposits and insurance.
Today I am going to answer these and many more Questions like this in this article.
What is Systematic Investment Plan
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If you plan to invest a certain amount in a particular MF in Weekly, Monthly, Quarterly or Half yearly basis, it is called a SIP.
The SIP amount could be as low as 100 rupees. Every time when you invest you get certain no. of units.
Every unit have a value that is called NAV. The NAV( Net Asset Value) is determined by stock market.
As you know that in a mutual fund your fund is invested in share market by The Fund Manager of that Mutual Fund, its NAV value fluctuates according to the share prices.
If the market is down, the NAV of the said fund is low and you gets more Units. And if the Market is high, the NAV of the said Fund is also high and you get less No. of units accordingly.
How to start a Systematic Investment Plan.
SIP in Mutual Fund is very beneficial in long time. So, First you should determine your investment goal.
Second, you should determine your Time Period to get that Goal.
Third, You should determine your SIP amount.
Fourth, You should determine a good Mutual Fund plan.
You should take a investment adviser for that. Since your SIP amount Debits automatically from your bank's Saving account, so you should have a Saving Account with Cheque Book facility.
Second, you should determine your Time Period to get that Goal.
Third, You should determine your SIP amount.
Fourth, You should determine a good Mutual Fund plan.
You should take a investment adviser for that. Since your SIP amount Debits automatically from your bank's Saving account, so you should have a Saving Account with Cheque Book facility.
Benefits of Systematic Investment Plan.
If you get invested in Ten years or more it will be very beneficial for you. Some Awesome benefits of SIP-
- Discipline in Investment- Discipline is a key to success in a long term investment in SIP. Your small investment becomes a large corpus in a long run.
- Flexibility- Although it is advised to invest for a long term in Mutual Fund but you may exit anytime from your Plan and stop your SIP.
- Cost averaging-When you invest in a MF through Systematic Investment Plan there is a good possibility for you to buy it at average purchase price. So, it gives you the benefits of Cost Averaging.
- Power of Compounding- It gives you the Power of Compounding and the Power of Compounding works very well in the long term.
So, friends Systematic Investment plan is becoming very popular these days as SEBI is projecting it.
If you like this post helpful please comment in the comment section. Thank you!
If you like this post helpful please comment in the comment section. Thank you!
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