A Systematic Investment Plan or SIP is not a product in itself. It’s method of investing regular sum every month or every quarter.
Let’s say you earn Rs 50,000 per month, of which you want to invest 20% or Rs 10,000 every month.
An SIP automates this process.
Once you have initiated an SIP, every month, an amount of Rs 10,000 will automatically be debited from your bank account and sent to the Mutual Fund company. You can also stop it and withdraw your money anytime after six months.
The biggest advantage of an SIP is the habit of regular, disciplined savings. Every month this also gets deducted from the bank account through electronic clearing service, which is convenient. Another benefit is that when investing through SIP, it is not necessary to time the market. Investments will be made systematically every month or quarter depending on the option. It ensures investing in all phases of the market where more units will be accumulated during a bearish phase and a lesser number of units in a bullish phase. This way, you enjoy the benefit of rupee cost averaging under this method.
How much can your money grow ?
Enter the amount you would like to invest per month to see how much it can grow over in the future. The different rates of return are determined by the funds you select. E.g. if you prefer fixed income funds, then it can grow around 8-10% while growth funds can deliver 15% and more.
As you can see above, your small monthly investments can grow significantly to meet your future goals.