You may have heard a lot about systematic investment plans but may not be aware about the details about the same. Let us try to understand a few details about these systematic investment plans which are normally known as SIP.

What is a SIP?

It is a smart way of investing money in mutual funds. This plan makes it possible to invest a fixed amount of money at regular intervals. This can be weekly, monthly or quarterly. If you want to save wealth for the future in a systematic way then you must invest in these SIP Mutual Funds.
Understanding the difference between mutual funds and SIP Mutual funds:
It is possible to invest a large amount in mutual funds at once. But in the case of SIP the investor has to invest a specific amount in the mutual funds in a planned manner and at regular intervals. The investor’s money gets auto-debited from his bank account. This money will then be invested in a specific mutual fund. The investor is then given some units depending upon the current market rate. This is known as Net Asset Value (NAV). This way new unit gets added to the investors account every time a new purchase is made. The investor gets the benefits based on Rupee- Cost averaging and the power of compounding. In case of regular investors, the more units are purchased when the market rate is low and vice versa.

Benefits of SIP:

Systematic investments have a number of advantages. It makes you more disciplined and you save more regularly. Regular investments will take you closer to your financial goals. You have the flexibility to stop investing as and when you want. You can also reduce or increase the investment amount. The rupee cost averaging and the power of compounding helps the investor get good returns. There is not much fuss involved in this type of investment. All you have to do is give auto-debit instruction to the bank. It is very easy to monitor these type of investments.

Here is how you can use SIP investments for wealth creation:

If you want to create wealth with SIP investments and reach your financial goals then you must make sure that you start early. You must have a long term investment plan if you want to get maximum benefits and earn lots of money. It helps in diversifying your investments. This helps in decreasing the risk and it also helps you get maximum benefits. The investor also has the option to invest a large amount in the same scheme in which he has SIP. It will not affect the SIP in any way.
We all have financial goals but most of us do not know how to achieve the same. If you too are in the same dilemma then the best thing that you can do is invest in SIP. It is a planned way of investing fixed amount in SIP at regular intervals. It will help you become more disciplined in investments.