What is the benefit of SIP?
Systematic Investment Plan (SIP) allows you to invest a fixed amount at regular intervals in a scheme. There are many benefits of investing in a SIP.
- Power of compounding -Investing in SIP allows the investor to take advantage of the power of compounding. Regular investments in a scheme leads to compounding which means you earn interest on your interest as it is added to the original amount. This is very beneficial for long term wealth creation.
- Rupee cost averaging -When an investor invests through SIP, he gets the benefit of rupee cost averaging. It means that the investor gets more units when the Net Asset Value (NAV) of the scheme is low and less units when the NAV is high. This brings down average cost of units over the long term.
- Flexibility -An investor has the flexibility to choose the amount, duration and the interval of the SIP. They also have the option to change the amount, pause or stop the SIP.
- Disciplined investing -Investment via SIP inculcates the value of disciplined investing in an investor as they are committed to investing a specific amount for a fixed period of time which is essential in long term wealth creation.
What is a SIP? How does it work?
A Systematic Investment Plan (SIP) is an investment tool which allows the investor to invest a fixed amount at regular intervals in a Mutual Fund scheme.
SIP works by investing a fixed amount at a defined frequency. With this an investor does not need to time the market and can invest in a hassle-free manner.
What is the minimum amount to invest in SIP?
The minimum amount an investor can invest in SIP may differ according to the scheme they want to invest in. For more information click on this linkhttps://www.sbimf.com/en-us/investment-solutionsor contact your financial advisor.
How to automatically renew the SIP?
To renew the SIP an investor has to fill a fresh form and start a new SIP and choose the desired duration.
Can you increase the duration of SIP?
An investor can start a fresh SIP and choose the desired duration by filling in a fresh SIP enrollment form, start a new SIP online or through Investap.
What happens if I miss an SIP installment?
Missing a SIP instalment does not lead to any penalty however missing 3 consecutive instalments leads to cancelling of the SIP.
What is Top up SIP?
Top up SIP is a facility which allows an investor to increase the amount of SIP instalments by a fixed amount at pre-determined intervals
What is power of compounding?
Power of compounding is a concept in which interest earned on the investment is reinvested which leads to compounding of interest and helps in long term wealth creation.
What is the difference between Top- up SIP and SIP?
Top up SIP is a facility in which an investor can increase the amount of SIP instalments by a fixed amount at pre-determined intervals whereas SIP is a facility in which a fixed amount is invested at pre-determined intervals.
What is meant by “Rupee Cost Averaging?
Rupee cost averaging is a concept which allows an investor to take advantage of the market volatility. By investing in a SIP, an investor gets more units when the Net Asset Value (NAV) is less and less units when the NAV is high. This brings down the average cost of the units over the long term.
