In comparison to other investment options, Mutual Fund SIPs help investors to invest their money in various funds at regular intervals instead of a one-time investment.
With a wide range of investment options available in the market, investors often get confused while finding a plan for the best returns. Several investment options like Systematic Withdrawal Plans (SWP), Unit Linked Insurance Plans (ULIP), Equity Linked Saving Schemes (ELSS), and even Mutual Funds (MF) have gained traction in recent times. Among these, mutual funds have grown to be the most prominent one with lakhs of investors’ accounts being added every year as per the RBI data. When talking about different mutual fund options, Systematic Investment Plans (SIPs) are something that cannot be missed.
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It is a popular investment strategy that allows investors to allocate a small amount of money at regular intervals into a specific fund or a mutual fund scheme.
Here are all important details about mutual fund SIP, its performance and minimum investment requirement.
What is a Mutual Fund SIP?
Systematic Investment Plan or SIP is a method of investing in various mutual fund schemes through which an investor invests a fixed amount of money at regular intervals rather than making a one-time investment. It is said to be a disciplined and convenient way that helps investors build wealth with small investments over a period of time.
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Mutual Fund SIPs: Features
– Through Mutual Fund SIPs, investors can invest in a variety of stocks through a single investment.
– These funds are managed by professional fund managers who have the required expertise that can help generate good returns.
– MFs are subject to regulations by the Securities and Exchange Board of India (SEBI), thus ensuring the protection of the investors’ interests.
– SIP holds the power of compounding as the generated returns on investments are reinvested, and with time, the value of the portfolio increases.
Mutual Fund SIPs: Minimum investment
Being a convenient and affordable option to invest, individuals can begin by investing as little as Rs 500 per month in mutual funds.
Why are SIPs better?
– By investing in SIPs, investors get the option to put their money in regular intervals every month which will be translated into savings automatically.
– Those who don’t have very high savings can also take advantage of SIPs by beginning with as little as Rs 500 a month.
– The benefit of compounding also comes with SIPs that help in the exponential growth for investors. Through this, the monthly returns derived from the SIP are reinvested in the principal amount until maturity
