What is SIP(Systematic Investment Plan)

What is SIP or Systematic Investment Plan? One of the best investment option

Hello friends, in this post I will try to explain what is SIP Systematic Investment Plan and what are its benefits.

What is SIP (Systematic Investment Plan)?

Are you a salaried person? Every month a certain sum of money gets credited to your bank account, doesn’t it? Do you make efforts to save something out of your income? Sometimes you able to save but many times, you fail. I’m sure you all have same story to tell. Well, the logic is simple. As you earn your salary monthly and spend the same money on you EMIs, telephone bills, electricity bills, kirana bills, etc, etc. on monthly basis; you must save some part of income every month. Enough of ranga rangoti :p Let me get to the point.

Have you heard of SIP? Yeah, Systematic Investment Plan. Many people are reluctant to invest in share market and one should not if he/she does not have proper knowledge. SIP is basically mutual fund in which you have to invest on month on month basis. You have to invest only nominal amount say Rs.1,000 or Rs.5,000. I guess investing Rs.1000 is not a big deal even if you are earning Rs.10,000 a month. The most interesting thing about SIP is you will be able to get the benefit of investing share market (where rate of return is usually higher than other investment options) without having to worry about daily ups and downs in share market.

Now that you all have almost made up your mind to invest in SIPs, you must be concerned about the amount of risk you will be exposed to. Believe me here the risk is much lesser than directly investing in share market on our own. There are two ways to reduce the risk even further. First is to invest in SIPs of difference companies like HDFC, Birla Sunlife, ICICI, etc. Say, you want to invest Rs.5,000 per month then you should invest Rs.1,000 each in SIPs of five different companies. Yes, it works but don’t ask me how. Aam khao yaar, ghulia kyun ginte ho? Second way is to invest in ‘Debt-Equity’ SIPs rather than investing in ‘only Equity’ SIPs.

These SIPs are very convenient also. It has lock in period one year which means if you redeem (withdraw) before completion of one year, they will deduction some amount (normally 1%) and same is called exit load. After one year, you are free to redeem as per your requirements.

Now, you have to find out how and where to get your SIP done. I’m sure you will find it out. It’s not very difficult.

I hope you will make SAVING your habit. Thanks for reading!!!!

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