What is SIP (Systematic Investment Plan)?

 A systematic investment plan (SIP) is a disciplined approach in which it invests in which it invests a fixed amount of money in an investment fund at regular intervals.The SIP strategy ensures that you buy more fund units when the market is going down and fewer units when the market is going up. Here's how  your mutual fund shares are allocated to you when you invest through SIP: Number of Shares = (Investment Amount/Fund NAV) Imagine investing Rs.5,000 in a mutual fund every month. 

Let's take two situations where the NAV of the fund is Rs.20 and Rs.16. 

Case #1: The NAV of the fund is Rs.20 Case #2: NAV of the fund falls to Rs.16.

No.of units = 5,000/20 = 250.No.Units = 5,000/16 = 333 units. 

Either way, you end up with a win-win situation. You buy more units when the market goes down, while the value of your investment increases when the market goes up. At the time of redemption, all shares in your fund  will have the same value. Just that you bought some at a lower price and others at a higher price.In the long term, the total cost  is average.Anyone Can Invest SIPs are easy to understand and anyone can invest in them. 

SIP investments do not require in-depth analysis or market research. You don't even have to actively follow the development of the market. Find a fund that fits your goals and keep investing.This way you can avoid market timing and other unsafe strategies. Easy to Invest and Monitor You don't have to waste a lot of time out of your schedule investing every month. Once you've found a fund you like and completed all the necessary paperwork, you can put a standing order in your bank account to transfer a fixed amount to the fund each month. You can follow the fund's performance directly on your smartphone.The fund house also regularly sends account statements to your verified email account. 

The Power of Compounding The power of compounding is perhaps the main benefit of investing through SIP. It ensures that your financial  returns generate a return of their own. consistent investments.However, this works best if it invests in the long term to invest  early to maximize your investment yield.