What Is Sip And How To Invest In It Systematically?

By Author: Shashank Pawar
Total Articles: 13
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Systematic Investment Plan or SIP, as it is commonly known as, is a method of making small investments in mutual funds to reap long-term benefits. This has become one of the best investment avenues in recent years due to the security that it offers compared to stock market investment.

The real benefit that SIP offers is that investors can invest small amounts in multiple accounts, which shields the money (read investment) from market failures. This is one of the key reasons behind the raging popularity of SIP.

How SIP works?
The working mechanism of SIP is similar to that of mutual funds. Your money (read investment) is invested across multiple stocks so that gains and losses are neutralized and in most cases, gains get the upper hand, thereby giving you a greater return on investment. The best part about SIP is that your money is handled by money market experts, relieving you from the headache of monitoring your investments.

Exploring the benefits of SIP
As evident, the security offered by SIP is one of the driving forces behind its success and this can be attributed as one ...
... of its benefits. However, there are other advantages, as well, which this section will explore.

Earn more with the power of compound interest
When you invest in mutual funds for a longer period of time, you not only avail interest on the principal amount but also on the profits on it. This is the basic tenet and a huge advantage of compound interest that you can only get in a systematic investment plan.

Accumulate concrete savings by starting early
SIP offers a huge advantage to those who are saving up for their retirement funds. An early start can prove immensely beneficial and the returns on investment will be beyond imagination.

How to start SIP investment
Since SIP is a relatively new arena, unbeknownst to many, thorough preparation in conjunction with goal-setting is of utmost importance. It is important to note that whatever investment you make, it must satisfy the end goal that you want to achieve. Here are some useful pointers, explaining how to start SIP investment.

• As discussed goal-setting is the cornerstone of SIP investment preparation. It is extremely crucial to set goals that are specific and achievable.
• Beside goal-setting, it is important to set a timeline as well. You must know when you need the money as this will decide the tenure of investment.
• Once the goal is set and the timeline decided, you can ponder over how much to invest, which is crucial to determine the amount of money you will have to shell out every month. You can use an online SIP calculator to know how much you should invest.
• Last but not least, consult with a SIP advisor and select a plan that best suits your needs

How to start sip investment online?

Since we are not living in the 1980s, SIP now can be invested online, with the help of three simple steps. Just follow the steps to complete the procedure and before that, you are ready with some of the documents as

1. Get all the mandated documents and ready yourself for KYC checks.
2. Be KYC compliant by adopting various approaches. One such approach is verifying using your Aadhar card.
3. Create your profile and start investing online.

Wrapping up

In this article, we have explored the essentials of systematic investment and its benefits while touching upon how to get started with SIP. With this knowledge, you can kick off your SIP journey and start reaping long-term benefits. More than that, you now have a clear picture of SIP and mutual funds, which will help you make better decisions related to investments and savings.