Systematic Investment Plan is, as the name suggests, regular investment where you invest fixed
amounts every month in any of the funds. SIP is a means of investing in a disciplined manner
irrespective of the state of the market.
By investing a fixed sum at fixed intervals we can buy fewer units when the price is higher and more units when the price is lower. This is called Rupee Cost Averaging.
Power of Compounding
It is far better to invest a small amount of money regularly, rather than save up to make one large
investment. This is because while you are saving the lump sum, your savings may not earn much
interest. With SIP, each amount you invest grows through compounding benefits as well. That is, the interest earned on your investment also earns interest.
Lower Minimum Investment
If you make a one-time investment in a mutual fund scheme, the minimum amount that you have to invest is Rs. 5,000/-. Alternatively, if you invest via an SIP, the amount drops to as low as Rs. 500/- per month.
Power of Rupee Cost Averaging
Benefits of Systematic Investment Plan