SIP i.e. Systematic Investment Plan is a common method followed for wealth creation in the long run.SIP is just a method of investing and not any product or investment option.It is just a process through which you can contribute small but regular amounts to build a good corpus.
When you invest money through SIP, your money is invested in Mutual funds.Mutual funds further invest your money in :
- Debt Instruments – Debt Mutual Funds.
- Equity – Equity Mutual Funds.
SIP is usually considered a good method if you have long term investment goals and for long term wealth creation.
Features of SIP are as follows :-
- You invest small small amounts on a regular basis either weekly,fortnightly or monthly as per your convenience.
- You can invest in a variety of financial instruments like debt mutual funds,equity mutual funds based on your risk appetite.
- Investment through SIP usually gives better returns in the long run i.e.if amount is invested for a longer period.
- You develop a habit of investing since a fixed amount is to be invested at regular intervals.
- You can benefit out of Cost averaging i.e.Buy more units in low market and less units when market is high,thus reducing your average cost of purchasing.
To get additional details on SIP you can follow
10 Steps that you need to follow to start your SIP are :
- Set Your Finance Goals.
- Measure Your Risk Appetite.
- Plan Your Investment Horizon.
- Invest Online/Offline.
- Invest Directly/Through Financial Advisors.
- Application form.
- KYC Compliance.
- Decide Date and Amount of SIP.
- Decide Mode of payment.
- Select Fund Type.
For further details you can refer