What is SIP and How Does It Work?
15 January 2025
Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly in a mutual fund scheme. It inculcates financial discipline and benefits from rupee cost averaging.
How SIP Works
When you start a SIP, a fixed amount is deducted from your bank account monthly and invested in your chosen mutual fund. You buy more units when markets are low and fewer when markets are high, averaging out the purchase cost over time.
Benefits of SIP
- Discipline: Automated investments help you stay consistent.
- Flexibility: Start with as low as ₹500 per month.
- Power of compounding: Small investments grow significantly over the long term.
SIP is ideal for long-term wealth creation.