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  • Category: Banking

    What is systematic investment plan

    Want to invest in SIP? Searching for detailed information about this plan? Here you can get answers to all your queries regarding how to invest, how much to invest and who can invest etc. on this page.

    How to invest in systematic investment plan and what are the eligibility criteria for it?
    Who can invest in this plan and how to invest in this plan? I want full details about the systematic investment plan.
    What is the minimum investment amount for this plan and how long we can keep this investment plan?
  • Answers

    7 Answers found.
  • A SIP or a Systematic Investment Plan which allows investing a fixed amount regularly in a mutual fund scheme, typically an equity mutual fund scheme.
    Anyone can invest in this scheme and the minimum amount can be as low as Rs.500/- also per month.
    There are many reasons for investing in this as mentioned below.
    1. It imparts financial discipline to your life.
    2. It helps you to invest regularly without wrestling with market mood, index level, etc.
    3. It helps you to invest regularly without wrestling with market mood, index level, etc.
    4. When you invest over a long period and earn returns on the returns earned by your investment, your money would start compounding. This helps you to build a large corpus that help you to achieve your long-term financial goals with regular small investments.
    5. Investors don't have to choose the end date of the SIP. Once the goal is met, the investors can stop the SIP by sending a written communication to the fund house.
    6. You can invest monthly, bi-monthly and fortnightly, according to the convenience.
    7. SIPs allow investors to increase the SIP amount periodically. 'Alert SIP' is another form of the regular systematic investment plan which sends an alert to the investor to buy more when the markets are down.
    8. You can withdrawal SIP for your emergencies easily without any hassles.

    always confident

  • Thank you much Mr shrinivasa Rao for giving my question answers very politely. Now I have clearly understood.

    By Determination one can Accomplish anything

  • Mutual Fund has become a good investment avenue and many people are investing in this.

    There are two modes of investment in mutual funds. One is lumpsum investment and other is monthly investment which is technically known as SIP (Systematic Investment Plan).

    Mutual funds invest in shares (equity), debt instrument and other misc investments like bonds etc. Now these investments are subject to market risks. If the share market goes down, mutual fund value is eroded and the investor does not get any return and rather loses his money. If the market goes up, he is benefitted.

    Now there are some investors who do not have large amount of money for one time investment. Another thing is no one can time the market as it can go up or down any time. So to cope up with this the mutual funds have come up with the scheme of SIP in which one need not to deposit amount in one go and rather can deposit some fixed amount every month. So in that respect it resembles the recurring deposits in bank or post office.

    SIP has got advantage of averaging the ups and downs in the market. It is a good way to accumulate wealth in a long run. There is no confusion in it as when to purchase the mutual fund unit - today or tomorrow. It is one of the disciplined way of investing.

    Knowledge is power.

  • SIP also known as systematic investment plan, is designed to allow the customers to buy the small portion of the shares in the mutual funds. This concept was designed to help people with the systematic investment.

    SIP usually starts with as minimum of 500 Rs with most of the fund house. In some cases the amount may be high for some fund house with 1000 Rs. However most of the platforms on NSDL do have the funds that have minimum of 500 Rs.

    SIP can be done from 1 week to monthly, bi monthly, quarterly and so on. The duration set up is in the customers hand with most fund house. And some fund house have their own guidelines of the duration of investment.

    SIP investment is ideal for those with the job and low salary. And they wish to save into the equity and the debt.

    SIP is also suitable for reduction of the risk when investing into the equity platform or during the low percentage return days.

    SIP can be transferred from one fund in same fund house to another. It can be paused and also reduced in the invested amount as well.

    These are some of the things you should know about the SIP.

  • The full form of SIP is Systematic Investment Plan. It is actually a weekly, monthly, quarterly or half-yearly installment investment in the chosen mutual fund scheme, just like installment payment to a recurring deposit in a bank.

    SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP allows one to buy units on a given date each month so that one can implement a saving plan for themselves. The biggest advantage of SIP is that one need not time the market. In timing the market, one can miss the larger rally and may stay out while markets were doing well or may enter at a wrong time when either valuation have peaked or markets are on the verge of declining. Rather than timing the market, investing every month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance.

    An investor can invest a pre-determined fixed amount in a scheme every month or quarterly, depending on his convenience through post-dated cheques or through ECS /auto-debit facility. An investor needs to fill up an application form and a SIP mandate form on which they need to indicate their choice for the SIP date (on which the amount will be invested). Subsequent SIPs will be auto-debited through a standing instruction given or post-dated cheques.

    SIP helps the investors to average the market with equal investments during the ups and down. In addition, it helps the small investors to accumulate wealth by investing a small amount of money in every week, month or quarter.

    "If you are killed in action, you go to Heaven. If you win, you rule this Earth (as beautiful as Heaven). That is why, O son of Kunti, take a firm resolve and fight!"-- Shrimad Bhagwad Gita

  • Systematic Investment Plan or SIP is nothing but a regular deposition of the fixed amount of money on a fixed date of a month for either mutual funds or for equity fund purposes.
    SIP has following Pros:
  • By SIP the risk of the investment decreases a lot.

  • You do not need to look at the market conditions or the economy at all the times but the timely deductions and deposition of the funds will average out the risk

  • You can create a huge money by adding little by little every month for the long duration.

  • SIP has following Cons:
  • SIP deducts money at a fixed time and with the fixed amount. Because of these, when an opportunity is found at other day or time, you cannot take advantage of it. Most of the mutual funds or equity are lower at the certain point of time during bad news related to company performance in terms of result or management crisis, or because of a global or local economy. You have to buy the funds for this moment outside the SIP.

  • Dr. Paresh B. Gujarati.
    Mechanical Engineer.
    'I'mprovement always begins with 'I'.

  • SIP full form is Systematic Investment Plan. It's a kind of investment which can be done monthly, weekly, quarterly or half yearly.
    There are different funds available in the market which comes under the equity fund. So you can choose any of them by doing research
    and later start SIP by filling a form online or by visiting any bank. All bank have different funds so never go according to them. Check
    online for the best fund then check which bank is providing it through SIP otherwise invest online.

    When you start SIP some units are allocated to you according to the current market interest rate which will vary with markets up and down.
    So, people who are ready to take a risk should go with this. Also if you want good returns then you have to hold funds for a long time period.
    There is no maturity period. Whenever you require you can withdraw but if it is before one year then 1 percent will be deducted from the amount.

    Before starting any SIP you need to do KYC (Know Your Customer) in which you have to submit your Pan card and Aadhaar card.

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