What is SIP Investment: Are you looking for a better investment solution that will keep your investments safe while increasing your income? If yes, then SIP can provide a golden opportunity for you. SIP (Systematic Investment Plan) is an investment that provides investors the facility to invest some part of their income regularly.
In today’s world of technology, many people want to invest their money but They don’t know how to invest the money. Where else to invest? So let us know today about a new investment method called SIP. After all, what is SIP? How does this work?
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Do you know that you can start your investment while saving your income? And can fulfill your dreams. If yes, then SIP (Systematic Investment Plan) can be a very useful investment option for you. SIP is an investment strategy where you invest at a regular interval. It gives you the opportunity to invest in small amounts and big amounts.
What is SIP? (Sip Investment Kya hai)
Many people may not know what SIP is? And how does it work? This question comes in the mind of all new investors. SIP means systematic investment plan. Through this, Asset Management Company (AMC) launches its fund and small and big investors invest in that fund.
Through SIP, Asset Management Company (AMC) invests the money of the general public, and small and big investors in the stock market through its fund and manages their money. And takes a normal charge for managing the fund. Which can also be called commission. This is how SIP works. Charges may differ for different Asset Management Companies (AMC) and funds.
Top Asset Management Company (AMC) in which you can do SIP.
1 SBI Fund Administrator (SBI Fund)
2 Hedge Fund Administrator (HDFC Fund)
3 ICICI Prudential Fund Administrator (ICICI Prudential Fund)
4 AdityaVisor Fund Administrator (Aditya Birla Sunlife Fund)
5 Kotak Mahindra Fund Administrator (Kotak Mahindra Fund)
6 Tata Merchant Financial Services Fund Administrator (Tata Merchant Financial Services Fund)
7 HDFC Standard Chartered Fund Administrator (HDFC Standard Chartered Fund)
8 Kanan Trading Financial Services Fund Administrator (Kotak Trading Financial Services Fund)
9 DHFC Prudential Fund Administrator (DHFL Prudential Fund)
10 Axis Fund Administrator
Here is the link to AMC where you can go and get more information about them.
5 Most Popular Ways to Invest in SIP
When you do SIP through regular SIP, you can do SIP for a long time or for a fixed period. You can do regular SIP, weekly, monthly or yearly. Whatever fund you choose, invest a fixed amount in that fund.
1. Regular SIP
The amount of money opened through Regular SIP cannot be changed later. You will have to invest that much money continuously. This amount can be per month, per week, or annually.
2. Flexible SIP
When you do Flexible SIP, you start SIP with a fixed amount. Through this SIP, if you feel that you need to invest less money in SIP now, then you can reduce it. Or can be increased, hence it is called Flexible SIP. In this you have a lot of control over SIP.
3. Top-up SIP
When you start a top-up SIP, through this SIP you are allowed to change the amount of your SIP. You can add money to the SIP amount after a certain time interval. This is called Top-up SIP.
4. Trigger SIP
Trigger SIP is a method of investment where you wait for the market. When NAV comes to a certain level then you invest. This is called Trigger SIP.
5. Perpetual SIP
Perpetual SIP is a method of investment in which the investor can invest for as long as he wants. This investor decides when to stop the SIP. When the investor feels that SIP should be stopped now, then the investor can stop it by giving instructions to the fund house. You must have understood from these 5 points what is SIP? How does it work?
Advantages and Disadvantages of SIP
1) Provides the facility of Rupee cost averaging: –
This means that when you invest, it allows you to purchase the average value of the investment through the market. With this your investment becomes average. And your return increases.
2) Regular investment habits: –
It provides the habit of regular investment. Due to this your investment increases and the profit also appears bigger. And motivates you to keep doing SIP regularly. It helps in maintaining regularity and is very important for achieving financial goals.
3) Controlling Market Volatility: –
When you start investing, sometimes the volatility in the market is very high and at that time the SIP continues, which we do not stop. This makes our portfolio average. And there is no major impact on our investment. In which market volatility is under control and the profit is higher.
4) SIP Easy provides:-
In SIP you do not need a huge amount to invest, rather you can run the SIP for a long time by saving through small investments. It provides an easy and accessible investment option for new small and big investors. This provides you flexibility, you can start SIP weekly, monthly, or yearly if you want. From this, you can understand what is SIP. And how easy is it to invest?
5) Investment seriousness:-
Once you start SIP, you do not need to track your portfolio again and again every day and the amount of SIP will be transferred from your bank account on the date set for SIP. The deduction will be made so that it becomes a habit for you to invest regularly, this will give you good returns in the long run.
6) Time Saving:-
SIP provides you time a saving facility. Provides you with different time frames to invest. In which you invest as per your choice. You invest based on your income. And this helps you get into the habit of steady and regular investing over time.
7) Economic Security:-
SIP provides you with the facility of financial security. Through this your investment is made in various sectors. Which reduces your risk and thus provides financial security to your investment.
8) Savings in the long run:-
One of the more important benefits of SIP is that it provides you the opportunity to save over a long period of time. Through this you invest gradually and achieve your financial goals. This gives you a good return in the long run. With this you can make your financial plan successful. This helps you make long-term investment plans and protect financial stability.
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4 Disadvantages of SIP to know
1) Market boom:-
Investors should know that when the stock market is volatile then your fund also becomes very volatile. Due to which your fund sometimes shows more profit, sometimes less profit and sometimes negative return. An item return is not visible. You may suffer loss because of this.
2) Disregard for investment policies:-
If you do not invest as per your policies, as per the rules of the fund and as per your financial goals, you will incur losses.
3) Emergency Fund:-
If the investment does not have an emergency fund and there is a need to cancel the investment at the time of sudden emergency needs, you may suffer loss due to this. Therefore, emergency fund should be kept in advance.
4) Vagueness of investment objective:
Investor goals and requirements may change over time, so you should be clear about your objective. So that your financial goals can be achieved through your SIP.
Lump Sum Investment What is SIP?
In this method, a single payment is made and a lump sum amount is invested simultaneously according to one’s financial goal and one’s risk. In this method, the amount is not fixed. Whenever you have money and want to invest, you can invest.
Advantages and Disadvantages of Lump Sum SIP
1) Can potentially get higher returns.
2) You can put the money to work as soon as possible.
3) It is also possible that you cannot run your SIP continuously.
4) Returns may be less.
5) You are flexible to withdraw money at any time so that your investment and target are not met.
Two powerful and easy ways to invest in SIP
You can invest in SIP in two ways.
1) Starting SIP from the Demat Account
2) Starting SIP without any delay
How to start SIP from a Demat Account?
To invest in SIP from a Demat Account, first of all, you need to open a Dement Account, through this you can start SIP and stop it anytime. You can invest directly in any mutual fund from a Demat Account and time. You can withdraw and from Demat Account you can do both stock SIP and trading.
Example: –Zerodha, 5Paisa, Upstox, these are some discount brokers where you can go and open your Dement Account.
To open a dement account, first of all, you will need a document.
- Aadhaar Card
- PAN Card,
- Bank Account
- Cancel cheque
With this document you can easily open your dement account online and your account can be opened easily in 2 to 3 days. Then you can also do mutual fund SIP, stock SIP, and stock trading from your Dement account.
After opening a Dement account, select the mutual fund and your SIP investment amount:
Once the account is opened, the investor can choose the SIP fund and amount as per his choice. Then investors can start investing based on their income keeping their financial goals in mind.
How to do SIP from a Demat account?
To do SIP from Without Dement account, you can start your SIP by going to the website of any mutual fund online or offline or by going to any nearest sub-broker and starting your SIP.
Here also you will have to first create an account. To open this, necessary documents will be required like Aadhar Card, PAN Card, Bank Account, Passport size photographs,
Once your account is opened, you select your fund and then start SIP as per your risk profile. And you can also start investing by taking advice from experts.
How to start SIP from Mobile?
Many people do not know what SIP is? Can I do SIP through the mobile app? How to start SIP from a mobile APP? For this, all brokers and AMCs have mobile apps. When your account is opened, you can do SIP from mobile. Imagine that you have started SIP from a demat account.
For example, if you start SIP with your Zerodha discount broker, you will get an app named Zerodha coin. Here you can see all the details. How is your fund performing, how much you have invested, what will be your next SIP date,
You get all this information on the mobile app.
Similarly, whether you do SIP online or offline, you get the app of that broker or Asset Management Company (AMC). Which you can handle easily. This investment is very easy for both small and big investments. Now you must have understood what is SIP? And how does it work?
How choosing the right mutual fund can make you a millionaire in a day?
It is very important to choose the right fund before starting SIP. Let us know how to choose it. First of all, your financial goal should be clear. You should set your goal based on your income and finances. After that, you should know whether you want to invest for the short term or the long term.
The risk profile must be known. You have to take less risk or more risk. Look at your financial position and decide your profile based on your risk capacity. Choose the fund based on all this information.
1) Do some Surface-level research to gain some knowledge.
2) Look at the Net Asset Value (NAV) of the fund.
3) Compare with the return of the index
4) Check CAGR(compounded annual growth rate)
5) Check the fund manager, what is his experience? And for how long has he been working?
6) Check the rating of the rating agency of the fund you want to buy.
7) Check the exit load of the fund, if it is 1% or less than 1% then it is good.
8) Check the expansion ratio, it should also be less than 1%.
9) Check locking periods, it should not be more than one or two years.
10) Sharpe Ratio – Check the Sharpe Ratio. The lower the better it is considered to be. It is considered good if the sharp ratio should be between 1 to 2.
Why is SIP necessary for regular returns?
1) Set targets for investment
2) Keep investing continuously and focus on your target
3) Invest for the long term
4) Choose the fund as per your requirement, do not invest on someone’s advice, first check with yourself.
Then take a decision. Or take help from your advisor.
5) Choose a maximum amount for investment which can short out your financial problems.
6) Keep checking your portfolio. You should keep tracking the fund in which you have invested. And you should see whether everything is going well in this fund or not.
The real secret of SIP and common misconceptions
You can also know from these 5 points below what is SIP? And what are the positive and negative points of SIP?
1) SIP is only for small investors
Reality: Today, big and small investors invest in SIP. It is a safe and effective investment option for both small and big.
2) SIP gives low returns
Reality: Today SIP is giving the best returns. If you invest in a good fund, you can get returns up to 20% annually. And it gives better returns than fixed deposits, LIC, and all others, just here You may have to take some risks.
3) With SIP you can invest in only one fund
Reality: Through SIP you can invest in different sectors and in different funds. Due to this your portfolio gets diversified and the risk is reduced.
4) SIP requires more money for the investor
Reality: You can start SIP with a minimum of Rs 100. In this, small and big investments can be made in SIP as per your financial condition.
5. SIP is difficult to do
Investing in SIP is very simple. The entire process from opening an account to starting SIP is very easy.
Conclusion
Now you have understood what is SIP? How does this work? Its disadvantages and advantages, SIP is a modern and effective method of investment. It gives good returns on investment. It is an easy and safe way for investors to invest regularly and get good returns. With this, you can make your financial supplies secure. You can save money by investing in it for a long time. In which you get the opportunity to invest in various funds and this reduces your risk.
If you choose the right fund or invest on the advice of a fund manager, you can make your dreams come true. And can become a millionaire. Explore various investment options before investing and do thorough research so that you can choose the right fund. Plan your investment and invest as per your financial goals. So invest today itself and you can take a step forward towards success.
Finally, it is worth noting that whenever you invest or want to become an investor, first of all, you should study thoroughly or invest only after taking the advice of a consultant because in this also there is a risk that you may suffer a loss.
FAQs: What is SIP Investment, Types, Benefits, Myths
What is SIP?
SIP means Systematic Investment Plan. In which the investor invests his money at regular intervals for a long time invests continuously to achieve his financial goal and holds the fund so that he gets good returns in the long run.
For example
1. You can do SIP in any mutual fund.
2. You can do SIP in any one stock.
3. You can do SIP by making a basket in the stocks of two, five or more companies as per your choice.
Benefits of SIP?
SIP (Systematic Investment Plan) is an investment method that provides a means to make investments at regular intervals. This is a safe and convenient method that can prove to be a boon for achieving financial goals.
Regular investment:- SIP provides an opportunity to invest regularly. You can achieve your financial goals by investing regularly.
Careful investment:- SIP advises you to invest gradually. Through this, you get good returns even when the stock market is high and low.
Common sense and convenience:- SIPs are generally easily available and provide investors with the convenience of investing in various mutual funds and baskets of stocks.
Is SIP good for 5 years?
The duration of SIP (Systematic Investment Plan) will depend on your investment objectives and financial condition. If you feel that your goal will be achieved in five years, then you can do SIP for five years. But you will not get the full benefit of compounding in such a short time. A 10-year SIP is considered good.
How many years is SIP?
SIP (Systematic Investment Plan) does not have a fixed duration. Investors can continue SIP for one or more years as per their choice and requirements. Most of the investors do SIP for the long term because SIP gives profits in the long run.
When should one take SIP?
Need of money for any special purpose: If you need money to achieve any special goal, like buying a house, for education, for children’s marriage, or if you want to gift money to your children, then you should hurry up. SIP should be started from.
Daily investment experience: SIP gives you the practice of regularity and gives you experience in investing. Therefore, if you are not experienced in investing, you should start SIP quickly.
Long-term investment plan: SIP is a good option for long-term investment. If you are thinking of investing in the long term, start SIP early so that you can get better benefits in the long term.
Market Timing: The main objective of SIP is to grow your money. Compounding money by investing in the market for a long time. For this one should do SIP.
Can I invest Rs 500 per month in SIP?
Yes, you can invest Rs 500 per month in SIP (Systematic Investment Plan). If you want, you can start SIP by paying Rs 100, Weekly or monthly.
What should be done while doing SIP?
1. A target should be set for investment.
2. You should assess your risk profile.
3. The time interval for investment should be determined.
4. The investment amount should be determined.
5. You should choose your investment scheme and take the help of an investment advisor.
6. Regular investment should be followed.
7. You should monitor your investments.
Can I do SIP for 6 months?
Yes, you can do SIP for 6 months also but you may have some profit or loss in this. But in SIP it is believed that if you do SIP for more than two years then you can get 15% to 20% profit on your investment or you can get a return around that. Therefore, decide based on your investment goals, financial condition and your financial plan. for long time.
How can I withdraw money from SIP?
Withdrawal of money through SIP is very easy when you do SIP in any AMC or from a demat account. So you get an APP from which you can easily withdraw money.
How much should I invest per month in SIP?
How much should you invest per month through SIP? It depends on your four points.
1. Financial goals
2. Economic Situation:
3. Investor Profile:
4. Savings period
What will happen if a person invests ₹1,000 in SIP for the next 4 years?
If you do SIP every month for 20 years, you will get an increased amount. This amount depends on the performance of your fund and the type of fund in which you have done SIP.
Example:- You do a SIP of Rs 1000 in a good fund for 20 years. If that fund gives a return of 15% annually then after 20 years you will get Rs.
Rs. 15,15,955 (15.2 Lakhs) or even more.
Amount Invested Rs. 2,40,000 (2.4 Lakhs)
Wealth Gain Rs.12,75,955 (12.8 Lakhs)
Expected Amount Rs.15,15,955 (15.2 Lakhs)
What are the disadvantages of SIP?
1. Market movement may affect investment due to which your fund may give negative or low returns.
2. There is a period of investment in any fund or there is a locking period. If funds are withdrawn before that period, you may have to pay some penalty.
3. Negative news in the stock market: This may cause a loss in your SIP in the short term but in the long run its effect is reduced.
4. Not investing in a good scheme:-If you invest in a wrong or untimely scheme, you may suffer losses. Therefore, before taking funds, you should understand well or take advice from your advisor. Otherwise, you may suffer loss.
Is SIP good for 5 years?
The duration of SIP (Systematic Investment Plan) will depend on your investment objectives and financial condition. If you feel that your goal will be achieved in five years, then you can do SIP for five years. But you will not get the full benefit of compounding in such a short time. The SIP of 10 years seems good.
How much return do you get from SIP?
1. It depends on your investment and market movements.
2. Which fund have you chosen for investment?
3. What is the investment period?
4. Stock Market Trend What is the market condition when you are investing?
5. What is your investment quantity?