Grow your wealth with the SIP investments

 What is Systematic Investment Plan?

Commonly referred to as a SIP, a systematic investment plan allows investors to regularly invest a small amount of money in their preferred mutual funds. Unlike other investments, you don’t have to deposit a lump sum amount. Once the investor validates a SIP, a fixed amount of money is regularly deducted from their linked bank account.

Under the SIP plan, one can invest an amount as low as ₹500. The intervals at which the amount is deducted can be weekly, monthly, quarterly, half-yearly, or yearly based on their chosen plan. As SIP plans are pretty flexible in terms of amount and intervals, you don’t need to have a large sum of money to start with.

Further, with SIP, you can better understand the market dynamics and investment scenarios. In this way, a systematic investment plan imbibes a sense of financial discipline for the long run.

Four Reasons to Choose SIP

Apart from the ease of investment and the lowest possible investment amount, several other reasons make it an investment habit.

1) Power to Stop

Unlike insurance, savings plans, or other kinds of investment where you have to wait for a certain period before you can stop, you can stop SIP anytime.

2) Easy To Skip Payment

One of the popular benefits of the SIP is that you can skip the payment for a month (if your plan has a monthly investment option). Yes, you can skip the payment, and in the next month, you can continue the SIP by paying the coupled amount. This feature is quite beneficial as it doesn't allow your investments to stop due to any financial crunch.

3) Safety From Market Dynamics

The SIP provides you with a safety net from the market dynamics. If you invest today and the market is going down, it won't affect your returns. As the SIP calls for investment over a while, the downs and ups of the markets get averaged out.

4) Start New

The SIP also offers you the freedom to run two or more plans in parallel. If you begin with a small investment earlier and now have increased income or resources, you can start a new SIP and set new goals.