What is SIP ? How To Invest Systematic Investment Plan in 2024

What is SIP

What is SIP – There are many ways to invest your money in the market and there are many people who earn money every day by investing money in the market. Due to rumors and misinformation in the market, many people do not invest their earned money. Or they invest their money in the market by taking information from others, due to which they sometimes have to face losses. Therefore, before investing money in the market, we need to have complete knowledge about our method.

What is SIP

What is SIP :

SIP is a systematic investment plan to invest in mutual funds. In this, money is systematically invested with a small amount like 100, 500, or 1000 rupees every month without giving money collected at one go. After this, this SIP in Mutual Fund of all investors is managed by the Mutual Fund company with the help of an excellent and experienced Fund Management Team and is invested in different stocks in the stock market. By investing money every month in SIP, the investor gets a different amount of units every month. The value of these units depends on the volatility of the stock market.

This means if the market is down you get more investments with low NAV and if the market is high then you get fewer investments with higher NAV. But in today’s time, SIP gives many times higher returns as compared to FD and RD. You can also withdraw the savings amount from time to time in your SIP plan. For this reason, SIP has been in a lot of discussions for the last few years.

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SIP Full Form :

The Full form of SIP is a Systematic Investment Plan. SIP means having a systematic investment plan. The investment period in this is weekly, monthly, quarterly, and half-yearly. Investing in SIP can be started with fewer funds. This is necessary for those who do not have much knowledge of the markets.

How does SIP work :

You can invest in mutual funds mainly in 2 ways, first one of your amounts means that you can invest the accumulated money in one go which is called Lumpsum, and secondly keep giving some money every month by doing SIP. Which is called a systematic investment plan. So if you invest your accumulated money in a mutual fund in one time only then the mutual fund company allocates all NAV units for you only in one go and if the market is going high at that time then you get more money, in fewer NAV units will be available.

Whereas in SIP money is to be paid every month and with your every-month money mutual fund company buys units for you if the market is high in any month then you get a low NAV and in a month when the market is down you get more NAV units.

What is NAV in SIP :

Investment in SIP under Mutual Fund is based on NAV i.e. Net Asset Value. Happens accordingly. NAV Means 1 unit of Mutual Fund is invested according to the value of 1 share in the stock market. Similarly, investment in mutual funds can be started from 1 unit. NAV i.e. Net Asset Value varies every day according to the market.

SIP is Safe/Risk :

  • SIP invests with a small amount for a long period. Therefore, the risk is seen less in it.
  • If your investment level in Sip ever drops, then you may be in danger there.
  • You have to follow the basic behavior of the market. In such a situation, your deposited investment at a low value may end or even become zero.
  • A fall in the grade of any one company affects the value of the units of mutual funds
  • If a company cheats the bounce holder in any way regarding any payments, then there can also be a default risk.
  • You may have to face problems like problems in some technical system somewhere, but in today’s time, the whole process has changed in an electronic mood.
  • Recurring payments are made in SIP through ECS in India. Many mutual funds provide online information to investors about the benefits of equity-linked savings schemes.

You can start a Mutual fund SIP in Groww App And Upstox, Paytm Money. First You are opening a free Demat Account Now.

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What is SIP ? How To Invest Systematic Investment Plan in 2024

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