What is SIP/Systematic Investment Plan
SIP or Systematic Investment Plan has been gaining immense popularity in the financial mainstream these days. There is a huge increase in people who want to know about it and invest in it. Questions are being asked on how to go about in a SIP, best available mutual and equity funds with SIP plans and expected returns.
So, what is SIP?
It is an investment process in which people invest a specific amount in an instrument on a daily, weekly or monthly basis. SIP on a monthly basis has always been the most preferred option. Though people mostly do SIP in mutual funds, it can also be done in direct equity with the help of brokerage firms.
Investing in Mutual Funds
Identifying a suitable mutual fund is the basic step while making a SIP investment. Once you’ve identified, you can provide a mandate to the bank for SIP payment following which money will be deducted automatically. Thus, the process of saving and investing is done at the same time.
Mutual funds such as LIC mutual fund, Reliance mutual fund etc provide daily SIP plans.
Daily wage workers or anyone who gets paid daily will find these useful as the money they receive everyday can be saved and invested instantly.
Some of the advantages of this process are:
- It brings in discipline as you will not delay or postpone the investment process.
- A certain amount of money is saved and invested without any inconvenience caused to us.
- In case the investment is done in direct equity which fluctuates as per the market performance, it is likely to reflect on your returns. Instead of being disadvantageous, it becomes an advantage as you get an average price as returns.
Choosing the Right Investment
It is also important to choose the right investment
For that to happen, one must have a clarity on the purpose of investment, holding period and risk capability. Once the question of what to choose is answered, the work is half done. Once you have made the investment, make sure it is supervised and necessary changes are made every three months.
