All About SIP
What is SIP?
A Systematic Investment Plan (SIP), more popularly known as SIP, is a facility offered by mutual funds to the investors to invest in a disciplined manner. SIP facility allows an investor to invest a fixed amount of money at pre-defined intervals in the selected mutual fund scheme. The fixed amount of money can be as low as Rs. 500, while the pre-defined SIP intervals can be on a weekly/monthly/quarterly/semi-annually or annual basis. By taking the SIP route to investments, the investor invests in a time-bound manner without worrying about the market dynamics and stands to benefit in the long-term due to average costing and power of compounding
Benefits of SIP Investing
Power of Compounding
When you invest regularly through SIP and invest for the long term, the benefits are magnified by the compounding effect. Compounding effect ensures that you earn returns not only on your principal amount (actual investment) but also on the gains on the principal amount i.e. your money grows over time as the money you invest earns returns. And the returns also earn returns.
Power of Starting Early
The earlier one starts saving and investing regularly, the easier it is to achieve your goals. The graph below shows the impact of beginning to invest Rs.10,000 monthly at various stages of life till the age of 60 years (assuming a return of 12% p.a.).
Source : Internal
Value of investment on Retirement
Amount invested via SIP
If you start SIP at age 30, as per the illustration shown a corpus of approximately Rs. 3 crores can be generated at retirement. If you would have waited 10 years and started SIP at age 40, a corpus of approximately Rs. 0.9 crore would have been available to you at retirement i.e. a difference of Rs. 2.1 crore – which is the ‘cost of delaying starting SIP’
Goal based SIP Investing
We have many financial goals in life but do not know how to plan and invest for them. To plan your financial goals right, it is important to identify each goal in terms of a specific amount and the number of years that it will take to meet them. This is the essence of goal-based investing.Know More
Top Up SIP
This Top -Up in your SIP allows your investments to be in line with the increase in the cost of living or inflation and helps you plan for your financial goals right. It can also help you reach your financial goals earlier or create a larger corpus for your goal.
Helps save more in tandem with rising income – We expect our salaries or business income to rise annually by a certain percentage. If you Top-up your SIPs annually by the expected increase in your income, then it auto adapts to your rising income.
Frequently asked questions
An Investor Education and Awareness Initiative.
Investors should deal only with registered Mutual Funds, details of which can be verified on the SEBI website (https://www.sebi.gov.in ) under ‘Intermediaries/Market Infrastructure Institutions’. Please refer to website of mutual funds for process for completing one-time KYC (Know Your Customer) including process for change in address, phone number, bank details etc. Investors may lodge complaints on https://www.scores.gov.in against registered intermediaries if they are unsatisfied with their responses. SCORES facilitates you to lodge your complaint online with SEBI and subsequently view its status.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.