What is SIP and its benefits

What is SIP and its benefits

A SIP or Systematic Investment Plan allows you to invest a fixed amount every month in a mutual fund scheme of your choice. It is usually introduced in equity mutual funds.

Did you know that? What is Systematic Investment Plan or SIP?, you may have heard many people talking about SIP. You must have seen many posts related to SIP on your mobile or computer. But if you don’t know what SIP is, then through this post we will introduce you all the information related to SIP i.e. Systematic Investment Plan.

What is SIP and what is its function? etc. information will be given to you through our post.

There are many ways to save, but the real way to save is to increase your savings along with savings. We can invest or invest the saved amount in many places and get profit. But if you want to get regular and balanced money then you should invest your savings through SIP.

SIP By doing this, we are not only increasing our savings but also getting tax exemptions. Initially people were confused about SIP and considered it harmful, so today’s post will try to clear that confusion of people. SIP means And all important information related to it will be shared with you.

What is SIP – SIP means

We have heard many times that the ocean is made up of small droplets and this is 100% correct. The same applies to investments. It is not always necessary to invest big to get big money.

What is SIP ?

By doing so, it can put unnecessary burden on the financial status of the individual because in the process of making huge investments, he will put his financial status at risk. Hence, small investments made regularly, can generate huge funds in the long run, that too without taking any risk. SIP also works in the same way.

SIP is an easy way to invest with low losses. In which you can invest a certain amount every month/interval and save for a bigger goal, then from that small investment amount you can get a big amount in the long run.

SIP By this an investor has to invest a certain amount of money in stock market, mutual fund or gold etc. for a specific period of time, for people who have little knowledge of stock market and are unaware of the functioning of the market. Investing through SIP is a good solution for this.

A fixed amount is invested in a SIP at a fixed time interval. An investor can invest in the stock market, mutual funds and gold ETFs through SIP.

SIP has brought mutual funds within the reach of middle class people as it enables them to invest even those with limited budgets. Those who cannot invest big at once but can invest 500 or 1000 ₹ per month. . So through SIP it has come within the reach of such people. Middle class people can make big profits by making small investments over long periods of time.

In SIP, you invest a certain amount every month and buy units by investing in a company’s fund, for example, if a company’s fund has a NAV of ₹ 10, then by investing ₹ 1000 you get 100 units of that company. will take

And when you want to exit, you can sell the purchased units and make a profit at the prevailing market price at that time.

Do you want to do SIP in mutual fund?

If you want to invest your money in mutual funds, you can invest in them in two ways.

Earlier, you could invest a lot of money at once, called one time investment.

Another way is called SIP (Systematic Investment Plan). In this every month some money from your bank account is invested in a mutual fund of your choice.

Now you must be thinking how to start SIP in it. Then in that case you are a discount broker.grow up“But you can create your account. In this you can open a mutual fund account very quickly and easily and invest your money in it. It’s down the link has been given.

Through this link, you will first need to sign up in the Groww app if you don’t already have an account. At the same time, once you create an account, you can easily invest in mutual funds through this app, that too through SIP.

Benefits of SIP – SIP Benefits

SIP has many benefits like tax exemption, ease of investment etc. But there are some other benefits too, let’s know what are the benefits of SIP:-

1) Small investment

We know that only a certain amount needs to be invested regularly at regular intervals, so it is very easy to get the amount for investment from your routine and expenses.
By investing small amounts at regular intervals over a long period of time, you can earn large sums.

If you invest ₹ 1000 per month at 10 percent interest rate of return, in 15 years you will get around ₹ 414,470 at the end of your investment period. So you must have deposited only Rs 1,80,000 in these 15 years.

You can start investing in SIP from Rs.500. Which can bring you good profits in the long run.

2) Facilitation of investment

Investing in SIP is very easy. No need to worry much, just once you choose your plan, the mutual fund withdraws the amount from your account and deposits it in your chosen plan on the specified date.

Your bank account is linked to your SIP plan account. Like if your plan is to invest ₹ 1000 every month, ₹ 1000 is transferred from your bank account to SIP account every month. Remittances are used to purchase units that will benefit you in the future.

3) Risk reduction

The biggest and main advantage of SIP is that it has very less risk. Suppose you have fifty thousand rupees to invest in the stock market. You put that money together in shares. Now you don’t know whether the market will go up or down the next day.

This would be a very risky deal. Dividing the same investment into shorter intervals reduces risk. By depositing this Rs 50,000 in 10 installments of Rs 5000 each, we can protect ourselves from stock market losses. Similarly, SIP saves you from the downside of the stock market by investing small amounts by not investing large amounts at once.

4) Tax Exemption

When you invest in SIP, you do not incur any tax on the amount invested or withdrawn. But tax exempt schemes have a lock-in period of 3 years. You can get tax exemption by investing in it.

5) Systematic and disciplined investment

To invest in SIP, a small amount (as per your plan) is regularly withdrawn from your account and invested. This keeps discipline and order in your investment process. This discipline encourages you to save and inculcates the habit of saving.

6) Advantages of compounding

The term compounding means earning interest on interest. Whenever an investment is made in SIP and whatever return is earned on that investment amount, it is reinvested from the same place, thereby increasing the profit of the investor and increasing his profit.

7) Withdrawal facility from SIP

Most SIP plans do not have a lock in period. The lock-in period is the time during which you cannot withdraw your money from the plan. But most SIP plans do not have a lock-in period.

Investors can decide to continue or stop investing in SIP as per their needs. Through this, the investor not only gets good returns but also gets advanced liquidity at his convenience.

You can start investing in SIP today at just ₹ 500 per month. In this you don’t need to choose mutual fund. Most of these things are automated. The advantages of SIP are very high and its disadvantages are negligible.

If you have little money left over from your daily life, you should invest it through SIP. Although that money is still small, but after a few years and invested regularly, that small amount will turn you into a huge fund. You can use any method you want.

How to open a SIP account?

Above you are given information on how to open a SIP account. We use Groww app for SIP.

What are the SIP benefits of SIP?

A Systematic Investment Plan (SIP) allows you to invest a fixed amount every month in a mutual fund scheme of your choice. Its advantages are mentioned above.

Which mutual fund is right for you?

Mutual funds depend on your risk appetite. According to your research, only one will turn out to be correct.

what did you learn today

I hope you guys What is SIP? It should be understood. I request all you readers to share this information with your neighbors, relatives, your friends as well, so that awareness will be created among us and everyone will benefit from it.

I need your cooperation so that I can provide you with more new information.

But still if you like our post What is SIP ? If you find any deficiency, please give your opinion in the comment box and help us to fix that deficiency, thanks.

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