If You Invest Nothing, The Reward is Worth Little.
SIP – Systematic Investment Plan is a disciplined way of investing wherein a fixed amount of money is invested in a pre-defined mutual fund scheme at a fixed interval. You decide the amount, the SIP date and the schemes in which you wish to invest. One can plan different life goals be it such as children’s future, retirement, international holiday, holiday home, etc.
People perceive that SIP is either a mutual fund or different than a mutual fund. However, the fact is that SIP is a style of investment and not a fund/scheme or a stock or an investment avenue. It is a vehicle to invest periodically in a fund/scheme of your choice.
A systematic investment plan involves investing a consistent sum of money regularly, and usually into the same security.
A SIP generally pulls automatic withdrawals from the funding account and may require extended commitments from the investor.
SIPs operate on the principle of CAGR (Compound Annual Growth Rate) averaging.
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