What is SIP
An SIP (Systematic Investment Plan) is an ideal way of investing in the mutual funds. It allows the investor to invest in regular intervals. It is a planned way of investing, which helps cultivate the habit of savings and accomplish the goal of wealth generation.
Under SIP, one can invest on a quarterly, monthly or weekly basis as per their convenience. A fixed amount is auto-debited from the policyholder’s account and invested in mutual funds. A pre-decided number of units are allocated at the current market price. Since these plans are flexible in nature, the investors can increase the amount or discontinue investing in the plan whenever they wish to.
How to Get Started with SIP Investment?
When it comes to SIP, getting prepared is as important as playing the game itself. You need to follow 4 easy steps before you actually start investing in SIP.
- Set your financial goals – Your goals should be specific and attainable.
- Set a timeline – Decide when you need the money; this will be your investment tenure.
- Decide how much you need to invest – With the help of a SIP calculator, figure out the amount you need to invest regularly to accomplish your financial goals.
- Make a choice – Consult your financial advisor and go for a plan that meets your needs well.
Now you are all set to go. The money can be paid by post-dated cheques or through ECS (Electronic Clearing Service) in which you give a standing instruction to your bank to auto debit the investment amount from your account every month. The sum that you invest every month in the chosen SIP is invested in a mutual fund and makes money for you. You can always log on the company’s website and track your portfolio.