A Systematic Investment Plan, famously known as SIP, is a plan to invest at regular intervals
with relatively small amounts.
SIPs in open-ended mutual fund scheme allow you to invest a fixed amount of money at chosen intervals (e.g., daily, weekly, fortnightly, monthly, etc.) which help to build wealth in the long term with relatively low risk.
Goal SIP helps investors to invest into the chosen scheme for a predetermined tenure and after that investor can get monthly cashflow through Systematic Withdrawal Plan.
Flex SIP helps investors to invest similar or higher amount at predetermined intervals, determined by a formula linked to the value of investments, thus giving benefit of Rupee Cost Averaging and Value Averaging.
Rupee Cost Averaging = Buy more units when NAV falls
Rupee Cost Averaging + Value Averaging =
Buy more units + Invest More Amount when NAV falls
|Month 1||Month 2||Month 3||Month 4||Month 5||Month 6|
|SIP Amount (Rs.)||10,000||10,000||10,000||10,000||10,000||10,000|
Under SIP, we really don’t need to time the market. We can invest at predetermined intervals.
Generally, you buy more units when market is low and vice versa, this helps to average out cost of purchase.