INTRODUCTION TO SIP (SYSTEMATIC INVESTMENT PLAN)
SIP stands for Systematic Investment Plan. It is an investment vehicle which allows all the
participating parties in Mutual Funds Investments Online to allow them to invest in small amounts
(periodically) instead of one bulky investment
In the Systematic Investment Plan a fixed amount of money is invested by the participating parties in the Mutual Funds or individually. This amount of money is usually credited in the bank to be invested. However, the amount of money credited is periodically and is of small quantity, depending upon the scheme.
To understand it more accurately, Systematic Investment Plan allows the investor to periodically
buy the shares of a specific commodity by investing a fixed amount irrespective of the number of
shares brought. Thus, over the course of time, a large number of shares are stacked and the
Systematic Investment Plan is executed.
The Systematic Investment Plan allows the investor to build a steady flow of shareholding units while also making sure that no toll is made on the investor’s source of income meaning that by periodically depositing a fixed certain amount of money in the account, Systematic Investment Plan allows the investor to buy the shares of a fixed commodity irrespective of the shares brought.
A Mutual Funds Financial Advisor has a lot of responsibilities and therefore must be stronger both physically and mentally to meet and to cope up with the pressure in Mutual Funds investments.
ADVANTAGES OF SIP (SYSTEMATIC INVESTMENT PLAN)
As nobody likes to have a big amount of money deducted from their account, Systematic Investment Plan allow the participating parties in Online Mutual Funds Investment to invest in small amounts over a course of time instead of forcing them to invest heavily in one big commodity. Online Mutual Funds’ Investments are subjected to market risks, thereby if the amount of money invested is small, the profit may be large or small but the loss is always small. The Systematic Investment Plan is preferred by only this factor that all the participating parties in Online Mutual Funds Investment are less liable to a heavy loss and thereby encouraging more investors.
Another important factor which adds a plus point to advantages of Systematic Investment Plan, is the linearity it offers, meaning that due to small amounts of investment. The Systematic Investment Plan is based on the concept that “small drops of water make up the entire ocean”
WHY PREFER SIP (SYSTEMATIC INVESTMENT PLAN)
As explained earlier, as the Systematic Investment Plan allows the investment over a large course of time by allowing the investors to invest a small amount of capital. As the purchasing of the shares is fixed of a fixed commodity, this frees the investors to regularly browse the market for ups and downs. As the profits are compounded interest, the profits are majorly achieved.
ELSS, Tax Saving Mutual Funds when compared to other traditional to the more conventional, offers better results are the investment is more strictly and evenly spread out over the course of time. Following the scheme of Systematic Investment Plan, ELSS also offers a more liable source of income when the shares are to be sold or when the scheme has achieved its termination point.