SIP (Systematic Investment Plan) In Mutual Fund
A Systematic Investment Plan (SIP) is a popular investment strategy in the context of mutual funds. It is a disciplined and systematic way of investing money in mutual funds at regular intervals, typically monthly or quarterly. Here's how SIP works: How SIP Works Regular Contributions: Investors commit to investing a fixed amount of money regularly at predefined intervals (monthly, quarterly, etc.). The investment amount can be as low as a few hundred rupees or dollars, making it accessible to a wide range of investors. Rupee Cost Averaging: SIP follows the principle of rupee cost averaging. Since the investment is made at regular intervals, investors buy more units when prices are low and fewer units when prices are high. This averages out the cost per unit over time and reduces the impact of market volatility. Compounding Benefits: SIP takes advantage of the power of compounding. As your investment grows, the returns generated on your existing investments also start earning ret...