A Systematic Investment Plan, commonly known as SIP, is a method of investing a fixed amount in a mutual fund scheme at regular intervals.
Depending on the available options, SIP investments may be made monthly, quarterly, or at another permitted frequency.
How Does SIP Work?
Suppose an investor chooses to invest ₹2,000 every month through SIP. The selected amount is invested in the chosen mutual fund scheme on the scheduled date.
The number of units received depends on the applicable Net Asset Value (NAV) on the transaction date.
Key Features of SIP
- Allows regular investing
- Can start with relatively small amounts
- Reduces the need to time every market movement
- Encourages investment discipline
- Offers flexibility depending on scheme conditions
SIP does not eliminate market risk or guarantee returns. The value of investments may rise or fall depending on market conditions and the performance of the underlying securities.
Investors should understand the scheme and associated risks before starting an SIP.
