A Guide To A Systematic Investment Plan?

A Guide To A Systematic Investment Plan? – Every individual tries a series of measures in order to secure their future. To be financially dependent and to have a secure future you need to have cover. Still wondering on how to achieve this? How to start SIP could prove to be a worthy bet. This works out to be the best measure in order to secure your future.

How to start SIP - Systematic Investment Plan

Definition of SIP?

SIP stands for systematic investment plan focussing on a dedicated and regular investment pattern. Over a long course of time your wealth is build. An economical way to invest a fixed sum of money in mutual fund at regular intervals of time. Quarterly, monthly or weekly options are available you need to choose while investing in SIP. In simple terms this is a planned and systematic way of investing for your future.

How SIP operates

The moment you decide to invest in SIP on a monthly basis the amount is deducted from your bank account. You need to mention your bank account details from where the amount will be deducted. This amount is treated as mutual fund scheme. A pre -determined amount is set that is based on NAV is given to an investor on the date prevalent to the purchase date. You could also not be in favour for the amount to be deducted from your bank account along with enrolment form you can hand over the cheque. The mutual fund house is going to deposit the cheque on the specified date and the units will be credited on to your account along with confirmation provided.

Early the better of investing in SIP

A golden rule to follow is earlier you start investing in SIP the better it works for you. By SIP you invest the same sum of money over a period of time. But the average cost per share is reduced. Not forgetting to mention SIP provides a reasonable sum of money over a long tenure.

To start a SIP you do not need a lump sum amount of money. A small bit of money each month would suffice. Another benefit you get to cash in on the flexibility. It is possible to stop the investment or increase or decrease the investment as per your desires. You are in power of your decision and can take a call on what is to be done.

You get to invest in the best of mutual funds that reduces your risk to a considerable extent. In due course of time you are entitled to reasonable returns. Overall SIP culminates the habit of regular savings.

Power of saving outlines once you start investing from an early age. The longer you take the time to invest, greater delay in achieving your financial objectives. A small sum of money set aside for a periodic interval of time develops into a major saving over a longer tenure.

Regular investing is the key to amass wealth. This makes you disciplined  on the saving front and an important quality for wealth accumulation. Better results are assured in the long run.

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Article Author Details

Wayne Geffen