SIP full form is systematic investment plan. It is a service provided by mutual funds for help its clients invest methodically. An investor can use the SIP function to put a set amount of money into their chosen mutual fund plan at regular intervals.
You can start with as little as Rs. 500 per investment and choose from weekly, monthly, quarterly, semiannual, or annual SIP intervals. By investing in a systematic manner over time, the investor can reap the benefits of average costing and compounding over the long run without having to constantly monitor the market.
The compounding effect boosts the returns on long-term investments made through SIPs. Because of the compounding effect, your investment capital rises over time by generating interest and dividends on top of the initial sum you first invested. The invested money is earning interest, too.
Using rupee cost averaging, an investor can profit from the market’s ups and downs. When the (NAV) drops, SIP investors receive more units, and when it rises, they receive fewer units. Because of this, the long-term average unit price falls.
Top up An investor can take use of the SIP’s facility to raise the numbers of SIP payments at regular intervals by a predetermined amount.