SIP's-Investment in SIP Demystified

Systematic Investment Plan (SIP's) :-

• Systematic Investment Plan, commonly called an SIP, is a Godsend to those who wish to multiply their wealth intelligently and efficiently, without putting too much of it at stake at any given time.

• An SIP is a specific amount, invested for a continuous period at regular intervals, generally on a monthly basis. Using this method, an investor buys units of a scheme at a pre-decided frequency.

• Simply put, a SIP is nothing but a plan through which a fixed amount of money is invested into a mutual fund scheme at fixed intervals, for a fixed or variable duration of time (depending on the type of plan/fund scheme).

• In SIP's, instructions to increase/decrease the value of the monthly installment, start/stop at predetermined intervals, etc. can also be given.

How does SIP's work :-
The simplest way to understand the basic workings of SIP's is to imagine a child & a piggy bank. The child deposits’ a certain amount at certain intervals & before he knows it, the contents of the piggy bank have built up to a respectable amount.

In the same way, a systematic investment plan deposits a certain amount of money, which investor wishes, at certain fixed intervals of time, which could be a week, a month, an annual quarter, etc., and allows this amount to build up over time.
The biggest difference between the piggy bank and the SIP, however, is the fact that SIP's don’t just keep the money aside for you, but also invest that money into profitable businesses & give you a share of the earnings.
Also, with every periodic investment, the amount being reinvested keeps growing larger - which means that returns on the investments grow larger as well.
It’s up to the investor to decide whether he/she wishes to receive these investment returns in a periodic format, or as a lump sum at the end of the SIP’s tenure, when the investment matures.

How to start investing in SIP online:

• Investing in mutual funds through SIP online is faster, easier, & more efficient than the traditional way.
• The online SIP investment route doesn’t require a ton of paperwork or frequent trips to an office for signatures.
• Investors simply register with their email ID and phone number and submit digital copies of ID/address proof online.
• A secure account is then created and the investor can pick & choose the ideal fund.
• Traditionally, SIP investments required a large amount of paperwork & frequent trips to fund house, bank, or AMC etc.
• Today, SIP's can be started within a couple of hours in an entirely paperless & fully secure online environment.

To get started, one must meet the eligibility criteria to invest in SIP's in India, which is as follows:

• The investor must be an Indian Resident, Non-Resident Indian (NRI's), or Person of Indian Origin (PIO) who resides abroad on a full repatriation basis.
• The investor must be over the age of 18.
• The investor must own a bank account with the requisite funds.
• The investor must be sure that the SIP installment amount will be readily available before the investment date