Many investment options are available in today’s time like stocks, mutual funds etc. Among them, SIP is also an investment plan where you get very good profits, then if you do not know about SIP and you want all the information related to it, then this blog Must read till the end because in this blog we have given all the information related to SIP so that you will be able to decide whether you should invest in it or not.
What is SIP in English: What is SIP
SIP is a very easy way to invest in mutual funds. In this, you can save for a bigger goal by investing a fixed amount every month or at a fixed interval of your own.
sip With that small amount invested, you can get a huge amount in the long run. Through SIP, the investor has to invest a certain amount in Mutual Fund or Gold ETF etc. for a fixed period.
Investing through SIP is a very simple and better solution for those people who do not have much knowledge about investing in the stock market.
Meaning of SIP
SIP stands for Systematic Investment Plan or Systematic Investment Plan. This is the most popular way to invest in Mutual Funds systematically.
A large middle class section of the society keeps a part of its income in the form of savings; So that he can get financial security in future. Some people keep their savings in the bank. Some people who can take the risk also invest in the stock market.
Saving is considered right only when you invest it at the right place. Money invested in the right place also grows over time; And also protects your future.
Systematic investment planning is one such approach in today’s time; Which can give good return on your invested amount.
How SIP or SIP works
Under SIP, you invest a fixed amount of money in mutual funds continuously every month or at a fixed interval. Under this, you deposit a specified amount in a mutual fund of your choice at fixed intervals.
When investing through SIP, your bank account is linked with the scheme of mutual funds; And on the scheduled date of every month, money is transferred from your bank account to the MF Scheme.
So it is an automated way of investing. This inculcates your investing habit; And you don’t have to think about it again and again.
for example If you start investing ₹1000 in a SIP scheme; So every month ₹ 1000 will be deducted from your bank account; And will be invested in the scheme of mutual fund chosen by you.
In SIP you invest a fixed amount on a continuous basis; This reduces the risk of your investment in the long run.
Benefits of SIP or Benefits of SIP (SIP Benefits in Hindi)
Well, there are many benefits of SIP; Such as ease of investment, tax exemption etc.; But apart from these there are some other benefits as well. Let us know what are the benefits of SIP.
#1. small amount investment (Small Saving)
We know that it involves investing a fixed amount regularly at stipulated intervals. Therefore, it is very easy to get a small amount out of your daily expenses for investment.
You can get a large amount by investing small amount for a long period of time at fixed intervals. You can start investing in SIP from ₹500; Which can provide you good returns in the long term.
#2. Easy to Invest
sip Investing through this is very simple. For this, once you have selected your plan, on the specified date, the mutual fund company withdraws that amount from your account and deposits it in your chosen plan.
Your bank account is linked to the account under your SIP scheme.
for example If you plan to invest ₹500 every month; So every month that money is transferred from your bank account to the SIP account. Unit purchases are made with those rupees; Which will benefit you in future.
Thus, through SIP, you can easily make your investment without any hassle.
#3. risk reduction (Low Risk)
The biggest advantage of SIP is that the risk involved is very low.
for example You have ₹ 50000 to invest in the stock market. Now if you put those money together in the stock market; In such a situation, you do not know whether the market will go up or down the very next day. In this way your move will be very risky.
Now if the same investment is done by dividing it in small intervals, then the risk is reduced.
By depositing this ₹ 50000 through 50 installments of ₹ 1000, we can save ourselves from the loss of stock market volatility.
Thus SIP saves us from losses due to stock market fluctuations by not putting a large amount together and investing through small amount.
#4. Tax Rebate
When you invest through SIP; So you do not get any kind of tax on investing the capital or withdrawing that amount.
Schemes like ELSS which provide tax exemption. They have a lock-in period; By investing in such equity schemes for 3 years, you can get tax exemption under section 80C of Income Tax.
#5. Disciplined Investment
According to your SIP, a small amount is regularly withdrawn from your account and invested in mutual funds. This creates a system of discipline in your investing process. This saving discipline always encourages you; And you get into the habit of saving.
#6. Power of Compounding
Compounding means compounding. Compounding means getting interest on the interest of the money invested by you.
Whenever investment is made in SIP; the return on the amount invested; It is reinvested; Due to which the profit of the investor increases and his returns increase.
#7. Advance Liquidity
Most of the mutual fund schemes do not have any lock-in period. Investors can decide whether to continue or stop investing in SIP according to their need and goal. In this, the investor gets the facility of advanced liquidity along with good returns.
Some schemes like ELSS funds which have a lock in period of 3 years. Barring such a scheme, most of the schemes are like this; In which the investor can continue the SIP investment for a long time as per his need; or decide to close at any time.
#8. Rupee Cost Averaging
By investing through Systematic Investment Plan, you remain free from the fluctuations of the market. It is automatically invested at fixed intervals every month through SIP.
When there is a recession in the stock market, you get more units of Mutual Fund. When the same market is strong, you get fewer units.
Thus, in the long run, the average price of your mutual fund units is not affected by the volatility of the stock market.