Systematic Investment Plan (SIP): 5 Benefits Of Investing

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Systematic Investment Plans (SIP) is a method of investing a fixed sum on regular pre-specified basis, in a mutual fund scheme.

When investing a fixed sum, it allows you to buy units on a particular date each month, which will help in saving each month. By investing in SIP, individual will there by average out costs of investing and will benefit from the power of compounding.

Individuals have the option to choose between quantity-based and amount based SIPs from Stocks, Mutual Funds, ETFs and Gold.

Investment with small amounts

Under Systematic Investments Plans one can opt by investing in mutual funds with small sum each month of as low as Rs 1000.

2) Reduces Risk by Rupee cost averaging

Most of the analysts or investor suggest to invest through the Systematic Investment Plan, as it gives you an opportunity to average your costs, since you cannot predict market movements.


3) Returns depend on Power of compounding

By investing even small amount it is to accumulate wealth in long term. As investment and returns are mostly dependent on the power of compounding, it is better to start early to make higher returns.

Taxation on SIPs

Investment in equity SIP will not attract any capital gains if held for more than one year.


5) Disciplined approach

Individuals can diversify investments through multiple SIPs in different schemes to optimize returns as per your needs

Read more about: systematic investment plan, sip
Story first published: Saturday, September 12, 2015, 11:25 [IST]
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