What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan, colloquially referred to as SIP, is a method of investing in mutual funds wherein the investor contributes a fixed amount at regular intervals.
This could be monthly, quarterly, or any other frequency based on the investors convenience and financial goals.
The fixed amount is used to purchase units of a particular mutual fund scheme on the chosen investment date, resulting in the investor accumulating units over time.
This systematic approach, from which the plan gets its name, enables the investor to build a significant corpus over the long term through disciplined and regular investments.

Advantages of Investing Through SIP -
Now that we have a basic understanding of what SIP is let's delve deeper into the myriad advantages it offers, explaining why investors should consider this route for their mutual fund investments.

Disciplined Investing: An SIP instils financial discipline in the lives of investors. It prompts them to set aside a fixed amount regularly towards an investment, which not only encourages saving but also ensures that the money is put to work to potentially grow.

Rupee Cost Averaging: One of the most significant advantages of investing through SIP is the benefit of rupee cost averaging. Since the investment is made at regular intervals, more units are purchased when the price is low, and fewer units are bought when the price is high. This approach averages out the cost of investment over time, reducing the impact of market volatility.

Power of Compounding: The SIP route enables investors to leverage the power of compounding. Since the investment is made regularly over a long period, the returns generated are reinvested, which in turn generates more returns. This cyclic process can result in potential growth, especially over a longer investment horizon.

Flexibility: SIP offers an immense amount of flexibility to investors. One can start investing with a small amount and gradually increase it as income grows. Moreover, SIPs can be started, stopped, or modified at any time without any substantial penalties, giving investors the freedom to manage their investments as per their changing financial circumstances.

Less Intimidating for Beginners: Less Intimidating for Beginners: Investing in the stock market can be overwhelming for beginners, given its unpredictable nature. However, the SIP route provides an easy entry point. Since the investment amount can be as small as the investor is comfortable with, it offers a less intimidating way for novice investors to get a taste of mutual fund investing.

Mitigating the Impact of Market Volatility: The very structure of SIP is such that it reduces the risk associated with timing the market. Because the investment is spread out over a period, it mitigates the impact of short-term market fluctuations, making SIPs an ideal investment strategy in volatile markets.


Why you should invest in SIP rather than opting for any other investment plan - SIP is a best option to start investing for someone who want to invest in certain scheme which can give him better return after a fixed interval of time as SIP pays off high returns in the long term with the guarantee of substantial growth in investments and involves fewer market risks as compared to other equity investments. There are several other factors which into play while we talk about why SIP is a better option then any other investment. Let’s have a look at them:


• Less term and condition : With SIP investment the term and condition are not that complex as compare to other. Here you simply select a mutual fund scheme with the fixed amount that you want to invest per month or per quarter, for a particular period of time. You can choose whether you want to pay manually every month or quarter or you can automate this process by auto debit the fixed amount from your bank.
• Suitable for Middle class people: The SIP investment is more popular among all classes of people because you can invest any amount from 500 per month to any amount you want.
• Skippable Monthly Payment: You can skip the payment of any month, you want. You can pay the amount with the payment of next month.
• Penalty on discontinuing the plan: You can stop your plan anytime you want. There are no penalties for discontinuing the plan.