Systematic Investment Plan (SIP) is the best option for investing in Mutual Funds. SIP helps in instilling financial discipline and creating wealth for the future. With SIP, you can start small and gradually build up the structure in a systematic and planned manner.
SIP – What Is Systematic Investment Plan
SIP : There are many ways to save, but the only way to really save is to grow the amount of savings along with the savings. We can invest the saved amount in many places and get profit. But if we want regular and balanced money then we should invest the amount saved through SIP.
Systematic Investment Plan ie SIP is the most popular way of investing in Mutual Funds. In this way, you can pay the EMI as per your convenience in the mutual fund of your choice. Specifically, SIP is a good option for those who do not want to invest in the stock market directly or all at once. SIP has a higher potential for higher returns in the long run. There are many SIP plans in the market right now, you can build your portfolio by investing as little as Rs.500 or Rs.1000 at regular intervals, monthly, quarterly or annually, as per your convenience.
If you invest up to Rs 5000 monthly through SIP in mutual funds, then it will become Rs 1,07,55,560 in the next 26 years at 12% interest. While your total investment in 26 years will be Rs 15,60,000.
By doing SIP, we are not only increasing our savings, but also getting tax exemption through it. In the beginning people were confused about SIP and considered it harmful, so today’s post will try to remove that confusion of people and all important information related to SIP will be shared with you.
What is SIP
SIP : SIP is a way of automatically investing a specified amount every month/quarterly/yearly in mutual funds of your choice by deduction from your bank account. Wherein once a certain amount is decided, it will be automatically deducted from your account for a fixed period and regularly deposited in the fund of the mutual fund as decided by you.
We have often heard that “tip by tip fills the lake” and this is also 100% true. The same thing applies in the case of investments. It is not at all necessary that we always have to make huge investments to earn huge amount.
Doing so may put unnecessary burden on one’s financial position as he would be jeopardizing his financial position in the process of making a big investment. Hence, even if a small investment is made regularly, one can build a sizeable fund in the long run, without any risk. SIP also works in the same way.
SIP is a very easy way to invest with less loss. Wherein you can save for a big goal by investing a fixed amount every month/interval, then with that small investment amount you can get big amount in long run.
HighLight Point
| Description | Information |
| Name of the article | What is SIP investment? |
| sip full form | systematic investment plan |
How does SIP work?
Through SIP, the investor has to invest a fixed amount in the stock market, mutual funds or gold etc. for a fixed period. SIP is a very good way to start investing.
In SIP a fixed amount is invested at fixed intervals. An investor can invest in the stock market, mutual funds and gold ETFs through SIP.
SIP has made mutual funds accessible to the middle class people as it enables them to invest even those who have very low budgets. Those who cannot invest big at one go but can invest 500 or 1000 per month. So through SIP it has become accessible to such people. Middle class people can make huge profits by making small investments for a long period.
In SIP you invest a fixed amount every month and buy units by investing in a company’s fund, for example if the NAV of the company’s fund is 10, then investing 1000 will get you 100 units of that company in return. And whenever you want to exit, you can make a profit by selling the units you bought at the prevailing market price at that time.
Benefits of SIP
SIP in Gujarati : SIP is the best investment option for those who do not want to take the risk of stock market. Even the smallest investment can be done easily and that too in installments. In SIP, money is automatically deducted from the bank. By investing small fixed amounts over time, SIPs also help in cost averaging in volatile or falling markets.
SIP has many advantages like tax exemption, ease of investment etc. But it has some other advantages, let us know what are the advantages of SIP.
1) Small investment in SIP investment
- As we know that one has to invest only a certain amount regularly at a given point of time, so it is very easy to get the investment amount from your routine and expenses.
- You can earn huge amount by investing small amount at regular intervals for a long period of time.
- If you invest ₹1000 per month at 10 percent interest rate of return, in 15 years you will get approximately ₹4,14,470 at the end of your investment tenure. When you have deposited only Rs 1,80,000 in these 15 years.
- You will pay Rs. 500 can start investing in SIP. Which can give you good profits in the long run.
2) Ease of Investing in SIP Investment
- Investing in SIP is very easy. No need to worry much, once you choose your scheme, Mutual Fund withdraws the amount from your account and deposits it in your chosen scheme on a specified date.
- Your bank account is linked to your SIP plan account. As soon as you plan to invest Rs 1000 per month, then Rs 1000 per month is transferred from your bank account to the SIP account. The money sent is used to buy units that will benefit you in the future.
3) Low risk in SIP investment
- The biggest and main advantage of SIP is that the risk involved is very less. Suppose you have 50 thousand rupees to invest in the stock market. You put that money in stocks all at once, now you don’t know whether the market will go up or down the next day. This would be a very risky deal.
- If the same investment is spread over shorter intervals, the risk is reduced. By depositing this Rs 50,000 in 10 installments of Rs 5000 each, we can save ourselves from the loss of the stock market. Similarly, SIP protects us from the downsides of the stock market by investing small amounts instead of investing large amounts at one go.
4) Income tax benefits (tax exemption) from SIP investment.
- When you invest in SIP, you do not incur any tax on the amount invested or withdrawn.
- But tax exempt schemes have a lock-in period like 3 years. You can get tax relief by investing in it.
5) Systematic and disciplined investment
- To invest in SIP, a small amount (as per your plan) is regularly withdrawn and invested from your account.
- This maintains discipline and order in your investment process. This discipline encourages you to save and inculcates the habit of saving.
6) Benefits of Compound Interest
- The word compounding also means earning interest on interest. Whenever SIP is invested and whatever returns are received on that investment amount, it is reinvested from the same place.
- This increases the profit of the investor and increases the profit he gets.
7) SIP withdrawal facility
- Most SIP plans do not have any lock in period. The lock-in period is the time during which you cannot withdraw your money from the scheme. But most SIP plans do not have a lock-in period.
- An investor can decide to continue or stop investing in SIP as per his need. With this, the investor not only gets good returns but also gets advance liquidity as per his convenience.
List of Best SIP Funds in India based on last 5 year returns
SIP : Given below are the names of some SIPs which have given good returns in the last 5 years in the country.
| No | List of Best SIP Funds in India based on last 5 year returns |
| 1 | Quant Active Fund. No |
| 2 | Parag Parikh Flexi Cap Fund. consistency. |
| 3 | PGIM India Flexi Cap Fund. consistency. |
| 4 | Quant Large & Mid Cap Fund. |
| 5 | Mirae Asset Emerging Bluechip Fund. |
| 6 | Quant Focused Fund. |
| 7 | Canara Robeco Emerging Equity Fund. |
| 8 | Edelweiss Large & Mid Cap Fund. |
| 9 | Edelweiss Large & Mid Cap Direct Plan – Growth |
| 10 | Kotak Equity Opportunities Fund |
| 11 | Canara Robeco Bluechip Equity Fund |
| 12 | SBI Focused Equity Fund |
| 13 | Sundaram Focused Fund |
| 14 | UTI Flexi Cap Fund |
| 15 | Kotak Bluechip Fund |
| 16 | Amazing Asset Large Cap Fund |
| 17 | Edelweiss Large Cap Fund |
| 18 | DSP Flexi Cap Fund |
| 19 | Axis Bluechip Fund |
| 20 | Motilal Oswal Focused 25 Fund |
| 21 | Axis Focused 25 Fund |
SIP is a great investment
SIP : Investing in SIP is recommended for a longer period, so that investors can get the benefit of compounding. If an investor invests for 15 to 20 years, the rate of growth of the amount in the last period is high and it can give him good returns. After starting SIP in mutual funds, it is not necessary that you invest for a specific period. You can stop this investment whenever you want. There will be no penalty for doing so.
You can start investing in SIP from Rs 500 per month today itself. In this you do not need to choose mutual funds. Most of these things are automated. The advantages of SIP are many and its disadvantages are negligible.
If you have some savings from your daily life, then you should invest it through SIP. Though that money is small now, but after a few years and regular investment, that small amount will turn into a huge amount. You can use it however you want.
SIP – Last 5 Years Performance of Some Mutual Funds
What is SIP : At present, there are many such mutual fund schemes in the market, which have given annual returns ranging from 15% to 25% in the last five years. According to Value Research, PGIM India Midcap Opportunities Fund, Kotak Small Cap Fund and Mirae Asset Imaging Bluechip are the top funders with the highest returns. Let us know about the record of the last five years of these three funds.
PGIM India Midcap Opportunities Fund has given more than 25% returns in last 5 years. 5000 per month SIP is worth 11 lakhs against an investment of 3 lakhs in 5 years. In which you can do SIP of minimum 1000 rupees.
Kotak Small Cap Fund has given more than 23% returns in last 5 years. 5000 per month SIP in 5 years against an investment of 3 lakhs is estimated to be worth Rs 10.54 lakhs. Here you can do SIP of minimum 1000 rupees.
Myer Assets Imaging Bluechip has given 23% returns in the last 5 years. 5000 per month SIP has grown to 10.46 lakhs against an investment of 3 lakhs in 5 years.
Documents required for SIP
SIP : You must have the necessary documents to start a SIP. Which are as follows:
- But the card
- Aadhar card as address proof,
- passport size photo and
- Checkbook – Blank canceled check as it contains essential details like your account number.
FAQs
1. What is the full form of SIP?
The full form of SIP is ” Systematic Investment Plan “.
2. What is SIP and how does it work?
SIP is a way of automatically investing a specified amount every month/quarterly/yearly in Mutual Fund funds of your choice by deduction from your bank account. Wherein once a certain amount is decided, it will be automatically deducted from your account for a fixed period and regularly deposited in the fund of the mutual fund as decided by you.
3. What are the benefits of SIP?
SIP has many advantages like small investment, ease of investment, low risk, income tax benefits, systematic and disciplined investment, compound interest benefits, SIP withdrawal facility etc.
4. Is investing in SIP risky?
Yes, investing in SIP is subject to market risk.
5. What is Systematic Investment Plan ?
A Systematic Investment Plan known as SIP is a facility offered by Mutual Funds to investors to invest in a disciplined manner. SIP facility allows the investor to invest a specified amount at pre-defined intervals in a selected mutual fund scheme.
Advice from a financial advisor would be helpful
If you think so, then you are not quite sure about this. In such a situation, you can take the help of a financial advisor. Financial advisors can understand your needs. Can give you proper suggestions about the best SIP.
disclaimer
SIP : It is advised to invest in SIP only after consulting a qualified advisor. One should not invest immediately after seeing the return of any fund in any application or online website. There are many types of risks involved in this, which you cannot see with naked eyes, but when the risks will come in front of you in future, it will be known, so it is very important to invest in SIP after consulting a good advisor.
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