What is SIP and how does it work?

What is SIP and how does it work?


Do you know what is Systematic Investment Plan (SIP)? You must have heard lots of people talking about Systematic Investment Plan (SIP). You will see lots of posts related to SIP on your mobile or computer. But you do not know what is Systematic Investment Plan (SIP), through our post, we will introduce you to all the information related to Systematic Investment Plan (SIP).

Let’s Begin

There are lots of ways to save money, but with savings as well as increasing the amount of savings it has to be saved in a true sense. We can invest the amount in many places and make profits. But if we want to achieve a regular and balanced wealth, then we should invest the savings amount in Systematic Investment Plan (SIP).


Systematic Investment Plan (SIP) does not only raise the amount of our savings but we also get tax deduction through this. In the initial times, there was confusion about  Systematic Investment Plan (SIP) in people and they just thought SIP is harmful, so today our post will try to break the illusion of those people and all the important information related to it will be shared with you.


What is Systematic Investment Plan (SIP)

We have heard many times that the small droplets make the ocean and it is 100% Right. This condition is also applied in Investment. It is not always necessary that we have to make big investments in order to earn a huge amount. By doing this, there can be an unnecessary burden on the person’s financial condition as he will keep his gardener in the condition of big investments. Therefore, if small investments are done regularly, then a large fund can be created in the long turn, without any risk. SIP works similarly.


SIP is a very easy way to invest in Nutting loss. In which you can save for a big Opportunity or Business by investing a fixed amount every month. after that, you can get a big amount in the long run with the amount of that small investment.


Through SIP, the investor has to invest a fixed amount in a stock market, mutual fund or gold etc. for a certain period, those people who are not aware of the stock market and are unaware of the way the market works. It is a very good way to invest through SIP. The amount determined in SIP at the specified time interval is invested. The investor can invest in the stock market, Mutual Fund and GOLD etc through SIP.


SIP has brought mutual funds in the reach of middle-class people because it makes them investable even whose budget is very low. Once the big amount is unable to invest, but they can invest 500 or 1000 rupees per month. Medium-term people can make big profits for long periods of time by making small investments.


In SIP, you invest a certain amount every month in a company’s fund and buy their units, for example, by investing Rs 1000 of any company’s fund, you get 100 units of that company in return. Will take And whenever you want to get out, you can get some profits by selling your purchased units at the market price of that time.


Benefits of Systematic investment plan (SIP)

There are Most benefits of SIP, such as tax deduction, simplicity in investment, etc. Besides, there are other benefits too. Let us know what are the benefits of SIP.


1) Small investment:-

As we know, there is a certain amount of time to invest regularly at fixed intervals, so it is very easy to get out of the amount of investment from your routine and expenses.

At a fixed interval you can earn a large amount by investing a small amount on a continuous basis for a long time.


If you invest Rs 1000 of 10% interest rate every month, then in 15 years, you will get approximately Rs 414,470 for the completion of your investment period. While you have deposited only Rs 1,80,000 in these 15 years.

In SIP you can start investing from Rs 500. Which can provide you good profits in the long run?


2) Easy to investing:-

It is very easy to invest in SIP. There is no need to worry about it just after choosing your plan, the mutual fund withdraws the funds from your account and deposits it to your chosen plan. Your bank account is linked to your SIP scheme account. As you invest Rs 1000 each month, your bank account is transferred every month Rs 1000 to SIP account. Those sent rupees are used to buy the unit so that you get benefit in the future.


3) risk is very low:-

The biggest and main advantage of SIP is that the risk is very low. Suppose that you have to invest Rs 50,000 in the stock market. You put that money into stocks together. Now you do not know that the market will rise up or down in next day. It will be a very risky deal. If this investment is divided in a little bit, then the risk is decreased. We can save this Rs 50,000 from the loss of the stock market by depositing it at intervals of Rs 5000 in 10 installments. Similarly, SIP protects us from the loss of the stock market by investing a small amount due to not putting a large sum together.


4) Tax exemption:-

When you invest in SIP, you do not charge any type of tax to invest or withdraw the money. But tax deduction schemes have a lock-in period of 3 years. You can get tax exemption by investing in them.


5) Systematic and disciplined investment:-

In order to invest in SIP, a small amount (according to your plan) from your account is invested regularly. This makes discipline and order in the process of making your investment. This discipline encourages you to save yourself and makes a habit of saving you.


6) An advantage of Compounding:-

compounding means the interest is also found on interest. Whenever SIP is invested and whatever returns are given on the investment amount, it is re-invested from the back and forth on the same amount, which thereby increases the profit of the investor and in the profits it gets Increases.

7) SIP withdrawal facility:-

There are no lock periods in the maximum SIP schemes. The lock period is the time without which you cannot withdraw your money from the scheme. But most schemes of SIP do not have a lock period. Investors can decide to continue or stop investing in SIP as per their need. This results in not only good returns on the investor but also offers advanced liquidity according to its convenience.


In SIP you can start investing today at just Rs 500 every month. Best things this is automatic. The benefits received from SIP are very high and its loss is nutting. If you have a little bit of money from your daily life then you should invest in SIP. Even though the money is still small after a few years have passed and after investing regularly, that small money will collect you a huge fund. Which you can use as you like.


I hope you guys have understood about Systematic investment plan (SIP). I am convinced of all the readers that you too share this information with your neighbors, relatives, your friends so that we will be aware of our interactions and will all benefit from it. I need people’s support from you so that I can bring you even more new information.


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