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A Simple Guide to SIP

WHAT IS SIP?

SIP or Systematic Investment Plan is a plan through which a person can invest a small amount in a mutual fund at regular intervals (monthly/quarterly).
SIP averages your investment cost over the investment duration and gives the flexibility of choosing your own amount and frequency, making it an ideal investment option for any investor.

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Your Systematic Investment Plan

Monthly SIP Amount

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50,000

Expected Rate of Return(p.a.)

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30%

Investment duration

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30yrs

Your Investments:

The future value of your SIP investment:

How does SIP work?

  • Every month/quarter a specific amount (decided by the investor at the start of SIP) is deducted from the investor’s bank account and invested in the chosen mutual fund scheme.
  • Every time the amount is invested, units of the scheme (as per NAV) are allotted to the investor.
  • Since your investment amount gets broken down in equal installments, your investments average out the market ups and downs resulting in averaging your cost.
  • The Investor can redeem (withdraw) units or switch to another scheme, anytime he/she wishes to do so (Please check the scheme related documents as some mutual funds would have a specified lock-in period).

BENEFITS OF SIP?

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SIPs can be started with as little as 500 each month. You can choose the frequency as monthly or quarterly for investing.

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Target to achieve your long-term financial goals with SIPs as it helps you to accumulate corpus over a longer tenure.

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SIPs offer freedom from being on the constant look out for opportunities to time the market.

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SIPs inculcate financial discipline making you invest a fixed amount consistently at regular intervals. By starting early, even with a small amount, you can build a sizeable corpus over a period of time to achieve your financial goals.