What is Systematic Investment Plan?

An investor commits to invest a specific amount for a continuous period at regular intervals, this ensures that he gets more units when prices are lower and fewer units when prices are high, this works on the principle of rupee cost averaging when invested at different levels and automatically participate in the swing of the market.

Advantages of Systematic Investment Plan:

Power of Compounding, To avail the benefit of power of compounding one has to start early and invest regularly, a delayed investment will lead to greater financial burden to meet the required goals, at early stage a less investment needed where as more investment is needed at a later stage to accumulate the same planned corpus.

Benefits Of Investing In Mutual Funds Through SIP

•  Rupee Cost Averaging: The biggest advantage of SIP is that one need not time the market.
•  Power of Compounding: “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” – Albert Einstein
•  Discipline: Discipline is the key to successful investments.
•  Convenience: SIP is one of the most convenient ways of investing.
•  Tax Benefits: An investor can start a SIP in tax saving funds (ELSS) to avail tax benefits by saving upto 1.5 lakhs under section 80C.

Advantages of Systematic Investment Plan

SIPs give a disciplined approach to investing:
One of the major benefits of investing via SIP is that it helps in instilling the much needed investment discipline.

Convenience:
SIPs are also very convenient. Money is deducted from your Bank Account through Auto Debit Facility. Liquidity -Facility to withdraw the Invested Amount any time. Although not recommended for all times.

Minimize the risk of equity fluctuations:
As you are making periodic investment in equities you are able to ride through ups and downs of equity with ease. When the market goes up you earn fewer units and when it falls you receive more units.

Advantage of Diversification:
A major benefit of investing in Mutual Funds via SIPs is that you get the advantage of diversification even with small investments. So your risk is spread out enabling you to make most of the gains from different holdings.

Benefit of Compounding:
Since you remain invested for longer period, the investment is compounded and hence the yield goes up. Earlier you start investing in SIP, the better it is even with a small saving of Rs 1000/- and as your investment compounds over longer term it gives you an advantage of wealth creation. SIP should be done for a period of 10 to 15 Years (preferably 15 Years or more) to get full benefit of compounding.

Benefit of Rupee Cost Averaging:
It is a technique of buying fixed rupee amount of a particular investment at regular intervals, regardless of NAV. You are buying the units in all and different scenarios –Market goes up, Market goes down, Since you are buying units every month at a different NAVs, the purchase cost is averaged out.

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