what is SIP and how it is work

A large part of Indian society is made up of middle class people. This part of society keeps a large portion of its income in the form of saving, in order to secure future. It can be Short Term or Long Term according to the Savings requirement. Some people do their savings in the bank, then those who can pick up the risk can not withdraw from investing in the stock market.

Saving is incomplete till the money is invested in the right place. Money invested in the right place increases with time and keeps your future safe.

Most people are unaware that there are such things in the market where they can safely invest their hard earned money. At present, SIP is a method that can give a good return on your invested amount. Let us know a bit more about this scheme.

The complete form of SIP is the Systematic Investment Plan or systematic investment plan. This is a way to invest in Mutual Funds systematic or systematic. Under the SIP Investment Plan, you invest in a fixed installment mutual fund every month. In simple words, it is like the Recurring Deposit Scheme to be deposited in the bank. Under this, you deposit a fixed amount on a regular interval in the mutual fund of your preferred company.

In SIP Investment, your bank account is linked to the Mutual Fund's SIP Scheme and the money gets transferred from your bank account to the SIP Scheme on a fixed date of every month. In this way it is authomated way of investing so that you become a habit of investing and you do not have to think about it again and again. Like if you invest Rs.2000 in SBI's SIP Scheme, then every month your Bank Account will be Rs. 2000 will be Deduct and will be invested in SBI Mutual Fund.

SIP Investment is a way of investing in mutual funds. You can invest in mutual funds either in Lump Sum or through SIP. In the Lump Sum investment, you have to decide when to invest, how much to invest, and invest in mutual funds, and in this respect, market conditions also have to be taken care of. Whereas in SIP, you invest a certain amount of continuously, which reduces your risk in the long term. There are schemes to invest in SIP mutual funds

SIP is a type of Mutual Fund Investment and "Return" and "Risk" schemes, which are available on investment in mutual funds, depend on the market and various circumstances.

Example: For example, you choose Equity Scheme and start investing 500 rupees in each month. Now every month you will be deducting 500 rupees from your bank account and instead you will continue to get the units of SBI Equity Scheme at that time. Your money is reached with the Mutual Fund and the fund manager of the Mutual Fund will invest this money in Equity Market on the basis of his experience and purpose of the plan. In this way you have indirectly invested money in Equity Market and its risk and return will depend on the circumstances of Equity Market and the decisions of the Funds Manager

What are the benefits of SIP Investment?

1. Small amount investment:

It is easy to get rid of small amount to save in a middle-class family. Investment of SIP starts from small amounts. The small amount, which can be used at regular intervals, gives a good return on long-term investment. In SIP, you can start investing from Rs 500 per month, which can give you better returns in the long term with less risk.

2. Simple way of saving:

Saving through SIP is a very simple solution. When you invest in it, every month a fixed date is deposited in the SIP plan by withdrawing the fixed amount from your respective bank account. In this way you can easily make your investment without any hassle.

3. Withdraw money from SIP:

There is no Lock in Period in the maximum SIP scheme. Investors decide to continue or stop investing in SIP according to their needs and goals. This gives the investor a good return along with the advanced liquidity facility.

4. Power of Compounding

Compouding means interest on interest. When invested in SIP, whatever returns is returned, it is re-invested back to which the Returns of the investor increases.

5. Rupee-Cost Averaging:

By investing in SIP, you become free from market fluctuations. SIP gets invested every month or in a fixed interval, when the market is depressed, you buy more units of the Mutual Fund. If you get the same speed, you get fewer units. Thus, in the long term, the average cost of your Mutual Fund Units does not affect the market's ups and downs. Investing in this scheme reduces your risk on your investment in Long Term and gives you a good return.

6. Systematic investment:

Investments in SIPs are invested by removing a small amount from your account regularly. This will maintain an administration and system in your investment process.

7. Less risk:

The investment of SIP is low. The main reason for this is that instead of investing the Lump sum amount, investing in small amount reduces risk in the long term.

Before investing in SIP, it is necessary to understand its process. It can be understood in this way:

planning for invest in SIP you need to perform some step :->

Step I - Selection of the correct Mutual Fund and SIP

A lot of Mutual Funds and their SIP schemes are available in the market. Risk and Return are two important things in any investment and the best investment is where there is more returns in lower risk. Different mutual funds have different schemes according to the investment objectives and each Mutual Fund invests in its own way, so you first have to determine your purpose for which you are investing and how much time to invest They are. After that, the right scheme will be selected from the various Mutual Fund Schemes present in the market.

Step II - SIP Account and KYC

 If you want to invest in this scheme then you will have to open a SIP Investment Account. You need to submit Basic KYC Documents for this.

Step III - Planning:

When your SIP Account opens, then you have to determine the amount you have to invest. With this, in how many time periods you have to invest this amount, it must also be decided.