Using a systematic investment plan (SIP) to invest in mutual funds has become quite common. However, to invest in a SIP, you must first understand the benefits of SIP. So let’s have a look at them and also understand the Systematic Investment Plan:
Table of Contents
What is SIP?
The sip full form is Systematic Investment Plan. You can invest a set amount in your favorite Mutual Fund plan on regular basis with this approach. Every month, a set payment is withdrawn from your savings account. The money is subsequently put into the Mutual Fund of your choice.
Now let’s Discuss the benefits of SIP in India.
Benefits of SIP
There are multiple sip benefits of investing in mutual funds through a systematic investment plan (SIP).
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No Commitments
If you wish to cancel a SIP plan, there is no penalty. You can easily drop out of the SIP plan if you want to discontinue it. This is one of the major benefits of SIP of over recurring deposits (RD), which normally impose a fee if you choose to cancel them. After terminating your regular SIP investment, you have the option of receiving a refund or continuing to invest in the mutual fund.
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Skip-able
If you don’t have sufficient money in your account for the SIP investment for a given month for a certain occasion, you can still enroll in the SIP the following month. There will be no fines or actions taken against you. In the case of RD, skipping a payment will almost certainly result in a fine.
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More Money your earn more SIP you can start
You can easily start a new SIP plan in the same mutual fund or a different mutual fund if you begin generating more or if you are able to save more. That way, the excess cash will be put to good use in the long term!
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Discipline
The inability to save money is a typical problem among many people. The truth is that the more money you have, the more money you have to spend. This is why you should put money aside first, then spend. You invest before you spend if you schedule your SIP investment for the day after you receive your money.
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Every amount is welcomed
SIP programmes allow you to begin investing in mutual funds with as low as INR 500 per month. Here are the finest mutual funds to begin with an INR 500 SIP commitment. Even if you don’t have a lot of money, you may benefit from India’s development by investing in mutual funds!
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Rupee cost averaging
You’ve probably heard that investing in an overvalued market is a bad idea. You don’t have to stress about timing your investment when you invest through a SIP plan. During periods of extreme market volatility, your monthly SIP purchases fewer mutual fund units.
When the markets are down, a monthly SIP of the same amount buys you more units. As a result, you do not pay very high costs for each unit of a mutual fund in the long run. The process is known as rupee cost averaging.
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Compounding
Your monthly SIP investment generates returns when you invest using a SIP plan. Those profits are added to your original investment and re-invested! As a result, your monthly SIP and the profits you make are exposed to a compounding influence across periods, ensuring rapid growth.
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It Avoids Emotional Investing
When it comes to investing, you should put your emotions under control. The markets swing a lot in the short term. You could be tempted to make impulsive buys or sales when you see frequent highs and lows. This is almost never a good idea. You should keep your money invested for a long time.
SIP plans allow you to take a methodical strategy to investing. You protect yourself from reacting to short-term fluctuation by investing in a SIP plan on a regular basis.
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Past Experience
Mutual fund investors who put money into them 15 years ago are now earning massive bonuses. Take a look at a few examples.
Assume you began a SIP of $3,000 each month in HDFC Top 200. You would have spent roughly 5.4 lakh over the course of 15 years. At the same time, your investment would be worth about 35 lakh rupees!
Take the same SIP amount and invest it in Franklin India Prima Plus. You would have invested a combined of 5.4 lakh this time. In 15 years, your investment would be worth approximately 31 lakh!
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Higher Returns
SIPs generate twice the returns as typical fixed deposits or recurring deposits. This can assist you in avoiding increased prices due to inflation.
One Time investment vs SIP, which is better?
| Basis | One Time Investment | SIP |
| Time Period | If you take out your money before time period Charges and Fees will be applicable. | There is no restriction your can get your money anytime without any charges. |
| Returns | Lower than SIP. | Higher than One time investment. |
| Volatility | Cannot protect you from market volatility. | SIP protects you from market volatility. |
| Knowledge | You may need financial advice for investment. | No knowledge or advice required. |
How to Invest in SIP?
Consider below steps to to take sip benefits & Invest in it:
Goals
First and foremost, you must determine your investment goal, whether it is short-term, medium-term, or long-term wealth growth. Begin investing in SIPs according to your objectives. Keep in mind that SIPs with a longer period provide larger returns.
Selection
The next step is to choose the proper SIP mutual fund that aligns with your financial objectives. You can compare many SIPs and choose the best one.
Account Opening for sip benefits
You must now notify the financial institution of your decision to participate in the particular SIP. Complete the KYC paperwork and fill out the required form.
Conclusion
SIPs, or systematic investment plans, protect you from a variety of risks. Short-term dangers, short-term volatility, sensitive and impulsive reactions, overspending, and so forth are some of them. SIP plans are one of the healthiest and most efficient ways to invest in mutual funds in India’s stock markets.
This is all from your side regarding Benefits of SIP. Although, if you have any doubts about sip benefits you can just comment below.
Other Interesting blogs related to benefit of sip:
SIP Investment is Good or Bad?
FAQ About advantages of sip
SIP full form
The Full form of SIP is Systematic Investment Plan.
Sip meaning
The word SIP stands for Systematic Investment Plan. You can invest a set amount in your favourite Mutual Fund plan on a routine basis with this approach. Every month, a set payment is withdrawn from your savings account.
What is SIP?
The Term SIP stands for Systematic Investment Plan. You can invest a set amount in your favorite Mutual Fund plan on a regular basis with this approach. Every month, a set payment is withdrawn from your savings account.
What is SIP in Hindi?
SIP शब्द का मतलब सिस्टमैटिक इन्वेस्टमेंट प्लान है। आप इस दृष्टिकोण के साथ नियमित आधार पर अपने पसंदीदा म्यूचुअल फंड प्लान में एक निर्धारित राशि का निवेश कर सकते हैं। हर महीने, आपके बचत खाते से एक निर्धारित भुगतान निकाला जाता है। पैसा बाद में आपकी पसंद के म्यूचुअल फंड में डाल दिया जाता है।
SIP in Hindi meaning
SIP शब्द का मतलब सिस्टमैटिक इन्वेस्टमेंट प्लान है।
