Systematic Investment Plan (SIP) It is considered a good practice to invest regularly, particularly into volatile markets such as equity markets. SIP is an approach where the investor invests constant amounts at regular intervals. A benefit of such an approach, particularly in equity schemes, is that it averages the unit-holder’s cost of acquisition since more units are bought for the same amount of investment when the price/markets are down and fewer units when the price/markets are high. Suppose an investor were to invest Rs 1,000 per month for 6 months. If, in the first month, the NAV is Rs10, the investor will be allotted Rs 1,000 ÷ Rs 10 i.e. 100 units. In the second month, if the NAV has gone up to Rs 12, the allotment of units will go down to Rs 1,000 ÷ Rs 12 i.e. 83.333 units. If the NAV goes down to Rs 9 in the following month, the unit-holder will be allotted a higher number of Rs 1,000 ÷ Rs 9 i.e. 111.111 units. Thus, the investor acquires his Units at lower than the average of the NAV on the 6 transaction dates during the 6 month period – a reason why this approach is also called Rupee Cost Averaging. Systematic investing allows investors to buy into a volatile market over time at an average price without having to predict market movements. It is easier for investors to generate the smaller amounts required to invest through a periodic investment plan than the large sums required to make lump sum investments. Saving for goals becomes easier when investible surpluses are periodically invested. Mutual funds make it convenient for investors to lock into SIPs by investing through Post-Dated Cheques (PDCs), ECS or standing instructions (SI). An SIP can be used to initiate a fresh purchase in a scheme and open a folio or make additional purchases in an existing folio. The initial investment to initiate an SIP purchase is typically lower than that for a lump sum purchase. An SIP can also be initiated during a New Fund Offer (NFO). Systematic Investment Plan (SIP) It is considered a good practice to invest regularly, particularly into volatile markets such as equity markets. SIP is an approach where the investor invests constant amounts at regular intervals. A benefit of such an approach, particularly in equity schemes, is that it averages the unit-holder’s cost of acquisition since more units are bought for the same amount of investment when the price/markets are down and fewer units when the price/markets are high. Suppose an investor were to invest Rs 1,000 per month for 6 months. If, in the first month, the NAV is Rs10, the investor will be allotted Rs 1,000 ÷ Rs 10 i.e. 100 units. In the second month, if the NAV has gone up to Rs 12, the allotment of units will go down to Rs 1,000 ÷ Rs 12 i.e. 83.333 units. If the NAV goes down to Rs 9 in the following month, the unit-holder will be allotted a higher number of Rs 1,000 ÷ Rs 9 i.e. 111.111 units. Thus, the investor acquires his Units at lower than the average of the NAV on the 6 transaction dates during the 6 month period – a reason why this approach is also called Rupee Cost Averaging. Systematic investing allows investors to buy into a volatile market over time at an average price without having to predict market movements. It is easier for investors to generate the smaller amounts required to invest through a periodic investment plan than the large sums required to make lump sum investments. Saving for goals becomes easier when investible surpluses are periodically invested. Mutual funds make it convenient for investors to lock into SIPs by investing through Post-Dated Cheques (PDCs), ECS or standing instructions (SI). An SIP can be used to initiate a fresh purchase in a scheme and open a folio or make additional purchases in an existing folio. The initial investment to initiate an SIP purchase is typically lower than that for a lump sum purchase. An SIP can also be initiated during a New Fund Offer (NFO).

Having worked several years into Life Insurance, Health Insurance, Mutual Funds & Closely with people into financial planning i am now putting my first step in investment advisory

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