SIP - Systematic Investment Plan refers to an organized and disciplined approach of having a Mutual Fund Investment. With this you can make small portions of your savings reap significant returns if followed in a periodic fashion for a reasonable duration.
Benefit : Rupee Cost Averaging
i.e. Higher the Net Asset Value (NAV) - Lower the Units you get
Lower the Net Asset Value (NAV) - Higher the Units you get
Oppurtunity : Make use of the fluctuations in the Market
Ideal Combination :
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Scheme : Equity Diversified (May vary based on ur choice)
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Type : Open Ended (Preferably)
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Fund Allocation : Say Rs. 500/- (minimum or as per the scheme details)
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Period : Monthly Basis (Ideal)
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Date : within 5 days of Receiving ur Salalry ( i.e 5th of the Month)
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Option : Dividend Payout ( To enjoy the fruits periodically)
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Mode of Payment: ECS (electronic Clearing Scheme)
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Term : Min 3 Years
... Then wait and watch the Power of Compounding...
Thanks for sharing sir, “the earlier the better”, SIP is an excellent option if you don’t have much market exposure and if your source of income is monthly. It will have averaging benefits and due to rupee cost averaging the per unit cost will decline over long term. Here the pattern of buying more when the price is low and less when the price is high, need not worry too much about market timing if your expectations are not too high. SIP usually take advantage of the long term positive trend in equity investments.