What is SIP and How It Works?

by admin October 02, 2016

SIP is one of the most popular ways of investing, in fact, Sip is one of the “the ways of investing”. This term is one of the most common terms thrown away and is as popular as toothpaste

We already have discussed SIP let’s look at some of the benefits of investing in sip

Discipline approach towards investing: investing is just like any sports. To become Sachin Tendulkar of investing one need to have self-discipline timely and consistent investment are key building your wealth empire. Sip helps you to build this disciplined approach towards investment by continuously investing in a fund policy

Compounding Income: one of the main advantages if Sip is that it helps you to build your wealth via compounded earnings let’s take an example to explain this further Suppose you have invested 100,000 for 5 years @ 6% per annum

Income after 5 years Simple Interest ==130,000

Compound income=141,851.91

The decrease in rupee cost average: normally when marketing is booming we tend to buy more and more units and the market is decreasing we tend to sell these units. This is exactly what we shouldn’t do whenever the market is decreasing we should buy more and more. Now you would be wondering how SIP helps you?

Well whenever price is high you tend to buy fewer units and whenever market is not performing well one buys more unit because amount invested is fixed, this helps to bring down average cost price of mutual fund which means less cost of acquiring mutual fund units

Convenience: We all are busy grinding and doing basic chores hence it is very hard to take time out of your busy schedule. SIP helps you to save this time all you need to do is to perform some basic formalities and o0n given interval money will be automatically deducted from

your bank account. One less thing to worry about