You must have heard someone say this, but what does SIP mean? Is it a brand? Some new trend? Let’s understand what is an SIP.
You must have heard someone say this, but what does SIP mean? Is it a brand? Some new trend? Let’s understand what is an SIP.
A Systematic Investment Plan (SIP), more commonly known as SIP, is a facility offered by mutual funds to investors to invest in a self-controlled manner. It is a mode of investing in mutual funds where you can invest a specific amount of money either monthly, quarterly, or whatever period you choose.
This means that you don’t need to have a huge amount of money to start investing in mutual funds. You can start a SIP with an amount as low as Rs. 500.
How does it work?
The magic of compounding!
Your money will grow and multiply, slowly turning your small investment into a big sum.
Additionally, you don’t have to time the market. A small sum of money gets invested every month and you get the average cost. The cost of your investments is averaged over some time, thereby making sure that you never invest all your money at the highest point in the market.