What is a SIP(Systematic Investment Plan) ?

Dreams can only be achieved if you work towards them. Even building wealth is no different. A Systematic Investment Plan (SIP) helps you do just that.

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. Watch the video to understand how SIP helps.

Advantages of Systematic Investment Plan

1. Disciplined approach to investments
2. No need to time the market
3. Harness the power of two powerful Investment strategies:
  • Rupee Cost Averaging - Benefit from Volatility By investing regularly, you can take the advantage of market dips without worrying about when they’ll happen. Thus you end up buying more units when the price is low and fewer when the price is high, which can mean a lower average cost per unit over a period of time.
  • Power of Compounding - Small investments create Big Kitty over time When you invest regularly through SIP and invest for the long term, the benefits are magnified by the compounding effect. Your money grows over time as the money you invest earns returns. And the returns also earn returns, i.e. in effect your actual investments over time plus returns get compounded over the years which can grow into a large sum over a period of time.
4. Lighter on the wallet
5. Reap benefits of starting early

How SIP works?

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. Investors need to fill up an Application form and 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. The forms and cheques can be submitted to the office of the Mutual Fund / Investor Service Centre or nearest service centre of the Registrar & Transfer Agent. The amount is invested at the closing Net Asset Value (NAV) of the date of realisation of the cheque.

How can you plan for your SIP?

  • List down your dreams and goals and work out a plan to achieve them through SIP. You can try our Family Solution Tool
  • Ascertain the monthly/quarterly SIP required to achieve your goals. You can try out our Return value Calculator tool.​
  • Identify the scheme(s) in which you would like to invest and complete the formalities for SIP investment including forms and cheques/ investing online.
  • Invest for the long term as the twin benefits of power of compounding and rupee-cost averaging work through different market cycles
  • Diversify your investments for your dreams through multiple SIPs in different schemes to optimise returns as per your needs.
​You can also try Systematic Investment Planner Tool to invest fixed amount every month and achieve your desired dream.​
So, dream more and achieve much more. Start investing through a SIP today and work towards achieving your dreams.
Disclaimer : Any information contained in this article is only for informational purpose and does not constitute advice or offer to sell/purchase units of the schemes of SBI Mutual Fund. Information and content herein has been provided by CRISIL Research, a Division of CRISIL Limited, and is to be read from an investment awareness and education perspective only. The views / content expressed herein do not constitute the opinions of SBI Mutual Fund or recommendation of any course of action to be followed by the reader. Investors should consult their financial advisers before taking any investment decision.
Mutual Fund investments are subject to market risks, read all scheme related document carefully.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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