What are Systematic Investment Plan (SIP) facilities under mutual funds?
Systematic Investment Plan (SIP) facility through which you may investment in Mutual Fund schemes wherein you pay a set amount every month/quarter/half year for a set tenure. For example, if you take an SIP of Rs. 8,000 for 1 year on January 1, 2014, you will be paying Rs. 8,000 per month for next 12 months.
The statement “Small is Powerful” intends to market the idea of SIP that aims to convert small investment into larger investments over a span of time. Since the amount is invested regularly and is constant, you get additional number of units in the falling market and fewer units when the value is high. It helps you to smoothen out the market fluctuations and therefore the investments are a low cost over a period.
When should you invest in mutual funds through SIP?
SIP is beneficial as long as markets really are volatile or going down after you invested. If, at all, the markets turn bullish and start rising, SIP won't be beneficial, and may give less returns compared to lump sum investments. SIP is a simple concept and hence very powerful. Let’s see some factors as to why it’s worth investing through SIP mutual fund.
Why should you invest in SIP?
Are there any disadvantages?
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