SIP - One of the Best Investment Instruments for all

Author: Shashank Pawar

Are you planning to begin investing in shares and stocks? You can consider a SIP or Systematic Investment Plan for investments. It comes with a lot of benefits and is undoubtedly one of the best options for all investors.

What is a SIP?

SIP is a way of investing in mutual funds regularly. The method is similar to investing in a recurring deposit (RD) with a bank, with which you probably have some experience. Invest a fixed amount of money every month for a pre-specified period just like an RD. You get the principal amount back along with along with the profit (or the loss is subtracted from the invested amount), depending on the performance of the market.

One difference between SIP and RD is that your money is deployed in mutual funds, equity, or debt schemes, and not in a bank deposit. The good thing about this is that your chances of making a better profit are significantly high. Your money is subject to market risk but how much you earn or lose, depends a lot on when you withdraw it. Investing in SIP is a great way to start your journey in the share market. It infuses regular saving habits and enforces discipline as far as making investments is concerned.

You invest regularly, and you have a considerable wealth to rely on in the long run. As far as a SIP is concerned, you can invest daily, monthly, or quarterly. A fixed amount of money decided by you will get debited from your bank account on the date specified by you. The money will get invested in the various schemes for a tenure, which is decided by you as well.

Today, you can invest in SIPs online.

Benefits of Investing in SIPs

There are many benefits when it comes to investing in SIPs. Some of them are:

  • Light on your wallet: There is no pre-specified amount that you need to invest in a SIP. For instance, you can invest as low as INR 500 monthly or invest INR 1500 quarterly.

  • Lower market risk: With a SIP, you are somewhat resistant to market volatility. You can focus on your time in the market and invest in the best mutual fund schemes. Make sure you are there in the market for a long time to reap the benefits of a SIP scheme.

  • Power of compounding: With a SIP, you get into the habit of investing regularly, and it lets you compound the money you invested. For example, if you start a SIP for INR 1000 per month at 12% per annum for a tenure of 20 years, you will end up getting INR 12 lakh.

    • Important Pointers About SIPs

    How to Start a SIP Online?

    Starting a SIP online is easy. You will need to follow these steps:

  • Keep all your essential documents handy for the KYC process. You will need your PAN card, address proof (bank statement/utility bill/driving license), a cheque book, Aadhar card, and a recent passport-size photograph. You can complete your KYC online.

  • You will need to fill all the details as per your documents like name, date of birth, address, etc. This is a one-time process, even when you are investing in multiple SIPs. Next, you will have to upload a soft copy of all the required documents as mentioned by your fund house. If you don’t have the aadhar card, a video call will be scheduled.

  • Start investing by registering as a new investor.

    • How to Stop a SIP?

    It is as simple as logging into your account and choosing the ‘Cancel SIP’ option. Your request will be processed within 30-45 days.

    What Happens if You Miss an Installment?

    Your SIP remains active even if you happen to miss one-to-two installments. Your bank might charge you for not maintaining enough balance. Choose ‘Pause SIP’ to avoid these charges.

    Your Systematic Investment Plan remains active even if you happen to miss one-to-two installments. Your bank might charge you for not maintaining enough balance. Choose ‘Pause SIP’ to avoid these charges. Visit Mutual Funds Sahi Hai for more information.