SIP is or Systematic Investment Plan is a system which enables customers or investor to invest money regularly i.e. monthly or yearly. A SIP investment last for a minimum period of the year and it can last up to a maximum period of 5 years. The money is invested in mutual funds and that can be categorized in equity mutual funds and fund schemes. SIP is one of the most easiest ways to invest money, one can use a lump sump calculator to calculate money to known about the expected returns more like a forecasting tool.
Benefits Of SIP
There are many benefits of using SIP because the invested money is automatically is distributed by banks as you don’t have to do worry about. SIP generally allows customers to help average customers gain good investment returns. This is possible if you invest money over a long period of time irrespective of how the market works, you must purchase units when the market is low and sell them off when the market value is high.
Compounding is very much linked to SIP as it can be found in studies it uses the power of compounding which enables higher returns. If you have someone who has to want to invest money and wants to gain heavy money then SIP or mutual funds can be the answers to their prayers. You can calculate the projected returns by using an online lump sip calculator.
Types Of SIP
Top Up SIP
It allows existing investors to add extra money in regular intervals and is very much beneficial because it provides investors to invest in only best performing mutual funds.
This SIP allows investors to invest periodically in mutual funds of their choices until the period of mutual funds doesn’t end. It is best suited for people who like have more control over the finances.
As the name suggests it investors to pay money in a more flexible way i.e. increase in money and decrease in money depending upon the will of the investors. This is beneficial in times of financial crisis and if you miss your instalment you can pay cover the money in the next month.
SIP gives people opportunity to invest huge money and while also enabling them to earn huge profits with minimum tax reduction and other processing charges.