In this article you will know about the role of SIP in mutual funds. It is basically a tool, which is useful for the mutual fund investors as it gets them better returns on their small investments. Therefore, the writer precisely describes the importance of sip in mutual funds in the following article.
In the recent years, the sip has witnessed a rapid increase. SIP or systematic investment plans is a boon for the mutual funds investors. It is a primary tool that allows them to invest a small amount of money at certain time period despite of lump sums, which can be done on a weekly basis, monthly basis, so on and so forth.
What is sip in mutual fund?
In order to achieve your long-term financial goals, here is a guide to help you know what is sip in mutual fund. SIP generally is an equity scheme for investing a fixed amount in a mutual fund at regular intervals. With the help of SIP, you tend to get disciplined investments. Also, you can invest regularly without worrying about market fluctuations. You do not have to put much effort in investing money. It puts an end to all market predicaments and eases your task. Therefore, with regular small investments, you can achieve long-term financial goals.
Benefit of sip in mutual fund
Moreover, SIP is a good investment for the investors who do not have much understanding of the financial market. On the other hand, investment in SIP ensures no market opportunity is missed out. Besides, the investor gets the benefit of reduced average cost of units along with stable investment.
In addition to that, a recurring payment for SIP can be fixed with the help of ECS (Electronic Clearing Services). Moreover, some mutual funds enable tax benefits to the users under Equity linked saving schemes. Several companies in India offer this scheme. However, the locking period for the same is of three years.
Apart from that, you can customize your SIP. Additionally, you can start investing in mutual fund scheme with SIP only with a minimum amount of Rupees 500. Apart from that, you have an option to invest in mutual funds as per your convenience i.e. you can choose to opt for monthly, bi-monthly, quarterly, or whichever option seems suitable to you.
Although, there is so much risk involved in investing in mutual funds via SIP, hence it is suggested to contact a reliable fund manager, to take the right advice regarding the schemes and make investment accordingly.
The writer is a content executive and writes articles on mutual funds. In this piece of article, the author covers the role of sip, what is sip in mutual fund, and its benefits.