What is SIP and how does it work?
Do you know what is a Systematic Investment Plan or SIP? You must have heard from many people talking about SIP. You must have seen many posts related to SIP on your mobile or computer. But if you do not know what is SIP, then through this post of ours, we will introduce you to all the information related to SIP i.e. Systematic Investment Plan.
What is SIP and what is its function? You will be given information etc. through this post of ours.
There are many ways to save, but along with saving, increasing the amount saved is the only way to save in the true sense. We can invest or invest the saved amount in many places and make profit. But if we want to get a regular and balanced money, then we should invest the saved amount through SIP.
By doing SIP, not only are we increasing our savings, but through this we also get tax exemption. Initially, people had confusion about SIP and they considered it harmful, so today’s post will try to break that confusion of those people and all important information related to SIP means.
what is SIP
We have heard many times that the ocean is formed by small droplets and this thing is also 100% correct. The same applies in the case of investments as well. It is not at all necessary that we always have to make big investments to earn big amount.
By doing this, there can be unnecessary burden on the financial condition of the person because in the process of making big investments, he will keep his financial condition in jeopardy. Therefore, even if small investments are made regularly, a large corpus can be created in the long run, that too without any risk. SIP also works in the same way.
SIP is a very easy way to invest with low loss. In which you can save for a big goal by investing a fixed amount every month/interval, then with that small investment amount, you can get a big amount in the long run.
Through SIP, the investor has to invest a certain amount in the stock market, mutual fund or gold etc. for a certain period, people who do not have much knowledge in the stock market and are ignorant of the way the market works Investing through SIP is a very good way to get started.
A fixed amount is invested in SIP at fixed time intervals. The investor can invest in the stock market, mutual fund and gold ETF through SIP.
SIP has brought mutual funds within the reach of the middle class man as it makes them able to invest even those people whose budget is very less. Those who are unable to make big investments in one go but they can invest 500 or 1000 ₹ every month. can. So through SIP he has come in the reach of such people. Middle class people can earn huge profits by making small investments for a long time.
In SIP, you invest a fixed amount every month and buy units by investing in a company’s fund, for example, the NAV of a company’s fund is 10 ₹, then by investing 1000 ₹, you get 100 units of that company in return. Will take
And whenever you want to exit, you can get profit by selling those units you have purchased at the market price going on at that time.
Benefits of SIP
There are many benefits of SIP such as tax exemption, ease of investment etc. But there are some other advantages as well, let us know what are the benefits of SIP:-
1) Small investment –
As we know that only a fixed amount has to be invested regularly at fixed intervals, so it is very easy to get the amount for investment from your routine and expenses.
You can get a large amount by investing small amount at fixed intervals continuously for a long period of time.
If you invest 1000 ₹ every month at the rate of 10 percent interest return, then in 15 years you will get about 414,470 ₹ at the end of the tenure of your investment. Whereas you must have deposited only Rs 1,80,000 in these 15 years.
You can start investing in SIP from Rs 500. Which can provide you good profits in the long run.
2) Ease of investing –
Investing in SIP is very easy. There is no need to worry much for this, just once you have selected your plan, the mutual fund withdraws the amount from your account and deposits it in your chosen plan on the specified date.
Your bank account is linked with your SIP scheme account. As you have a plan to invest 1000 ₹ every month, then every month 1000 ₹ is transferred from your bank account to the SIP account. The money sent is used to buy units which will benefit you in future.
3) Risk Reduction–
The biggest and main advantage of SIP is that the risk in it is very less. Suppose you have fifty thousand rupees to invest in the stock market. You put those money together in the stock. Now you do not know whether the next day the market will go up or down.
This will be a very risky deal. If the same investment is divided in short intervals, then the risk is reduced. By depositing this 50,000 rupees in 10 installments of 5000 ₹, we can save ourselves from the loss of the stock market. Similarly, SIP saves us from the disadvantages of the stock market by investing a small amount because of not investing a large amount at once.
4) Tax exemption –
When you invest in SIP, you do not get any tax on the amount invested or withdrawn. But the tax-exempt schemes have a lock-in period such as 3 years. You can get tax exemption by investing in them.
5) Systematic and disciplined investment –
To invest in SIP, a small amount (according to your plan) is regularly withdrawn and invested from your account. This keeps discipline and order in your investing process. This discipline encourages you to save and inculcates the habit of saving.
6) Benefits of Compounding –
The meaning of the word compounding is to get interest even on interest. Whenever investment is made in SIP and whatever return is received on that investment amount, it is re-invested again from the same place, which increases the profit of the investor and in the profits he gets. growth ensues.
7) Facility to withdraw money from SIP-
There is no lock in period in most of the SIP schemes. The lock-in period is the time without which you cannot withdraw your money from the scheme. But most of the SIP schemes do not have a lock-in period.
The investor can decide to continue or stop investing in SIP according to his need. With this, the investor not only gets good returns but also gets advanced liquidity as per his convenience.
You can start investing in SIP today at the rate of only ₹ 500 per month. In this you do not need to choose Mutual Fund. Most of the things in this are automatic. The benefits of SIP are very high and its disadvantages are negligible.
If you have a small amount of money running out of your daily life, then you should invest it through SIP. Even though that money is still small, but after a few years pass and after investing regularly, that small amount will get you a huge corpus. You can use whichever way you want.
How to open SIP account?
The information about how to open a SIP account has been given to you above. Well we use Groww app for SIP.
What is SIP Benefits of SIP?
Systematic Investment Plan (SIP) gives you an opportunity to invest a fixed amount every month in your preferred mutual fund scheme. Its benefits have been mentioned above.
Which mutual fund is right?
Mutual funds depend on your risk appetite. The only one that turns out to be right according to your research.
what did you learn today
I hope you guys must have understood about what is SIP (SIP in Hindi). I request all of you readers that you also share this information in your neighborhood, relatives, your friends, so that there will be awareness among us and everyone will benefit a lot from it.