October 3, 2022

What is SIP in mutual fund in 2022?

You must have heard the name of SIP at some point or the other. What is SIP. Why should we invest in SIP? What are the benefits of SIP? All these questions must be running in your mind.

Nowadays SIP is very popular as an investment. Friends, in today’s time we all want to build wealth by investing somewhere. Some invest in gold, some in the stock market or some invest in FD, PPF, etc. One of these popular options is SIP, which has been growing rapidly for the last few years and its potential is visible in the future as well.If you are also interested to know about SIP, then let us understand what is SIP, SIP meaning and what are the benefits of SIP?

What is SIP in Mutual funds

SIP means Systematic Investment Plan. It (SIP meaning) means to invest continuously by you systematically.

In simple language, you keep putting money continuously in the scheme of any one mutual fund, due to which you accumulate a lot of money in maturity. You can understand this with the example of a piggy bank of your house, you keep putting some money in it every day and when you break it in the last, a lot of money comes out of it. But here you do not get any interest on that money but in SIP you get profit on your money.

SIP is a means of investing in mutual funds. In SIP, you continuously deposit some amount in your portfolio at a fixed interval, which builds up your wealth in the long run. Through SIP, you can achieve your goal by investing in any scheme matching your objectives.

Starting a SIP is very easy these days. When you add your SIP Biller to your bank account or enable ECS, your SIP installment automatically gets deducted from your bank account on the due date. For this you have to keep auto debit on.

WHY SIP?

Friends, most of the people are not able to make a lump sum investment. They can also start investing in SIP with low investment.Mutual funds invest most of their share in the stock market. Now suppose you want to invest in the stock market, now you have three options.
First of all, choose good stocks by investing your own research and time. If you do not have good knowledge then you can lose your money in this.
Second invest through an investment advisor. In this method, the investment advisor has to pay you a fee and he advises you to buy and sell shares again and again, in which you have to take time to do all these transactions. Despite being an investment advisor, you may incur losses.
Third, in this way you can invest through mutual funds, in which you neither have to spend time nor do regular transactions. It also does not have to track your portfolio from time to time. Thus investing in mutual funds can be done to take advantage of market returns.

What is the minimum investment required in SIP?

There is also an advantage of SIP that you can start your investment with just ₹ 500. There is no upper limit. You can invest according to your income in SIP.
You can start investing in SIP even from your young age. The sooner you invest in this, the more you will be in profit. For example, if you have started a SIP of only ₹ 500 at the age of 25, then even at the age of 60, ₹ 32.50 lakh will be deposited in your hands, even with a return of 12%.

Why should I invest in SIP

Friends, at one stage of the age, we all need money for some work in a lump sum. For this we invest in one way or the other. SIP also facilitates us to fulfill our dreams in future.
When you invest disciplinedly through SIP, your chances of getting good profits increase. No matter how bad you choose the worst SIP scheme, it also has the capacity to give you returns in the long run. So you should not hesitate at all to invest in SIP.
Another major reason for investing in SIP is the low financial burden. SIP is the best option for investment for middle class and employed people. All other additional investments ask you for a slightly higher amount whether it is gold, or FD. One can avail SIP returns by investing ₹ 500 or ₹ 1000 every month in SIP.

SIP for employed people

SIP is one of the best option for job profession person. They should keep the date of deduction of SIP within 2 to 5 days from the date of credit of their salary. So that there is no risk of missing their installation. Employed individuals can save their tax up to 1.5 lakh under section 80(C) of Income Tax by investing in ELSS scheme.

Rules for SIP

If you want to make good wealth by investing in SIP then you have to follow some rules. Due to which it will be easy for you to achieve your goals within the prescribed limit.
You should choose SIP according to your goal and risk taking ability.As far as possible, never let your SIP installment bounce. If your installment bounces then you may have to bear the loss in cost and compounding.
The most important thing is patience. You have to give some time to your investment. Many times, after starting a SIP, some people start seeing their portfolio negative, due to which they panic and exit by selling their investments. Friends, you must keep in mind that you have to give time to your investment.

Benefits of Investing in SIP

Investing through SIP gives you many benefits.
There is no problem of financial burden due to low investment.
The money held by many people is handled by the professional fund manager, which reduces the amount of risk.
You can choose the Dividend plan of SIP You can get the amount of dividend from time to time.
You can increase or decrease the amount of your SIP whenever you want.
Money is invested by the fund manager in the stock market, gold, bonds, etc. which keeps your portfolio diversified.
Time plays the most important part in SIP. The longer you stay invested, the faster your returns will grow. In SIP, you get tremendous benefit of compounding. Let me explain it to you with the help of an example
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