What is SIP Investment with Examples? Benefits, Advantages

SIP Investment-What is SIP Investment-How does SIP Investment work-Example of SIP Investment-Benefits of SIP Investment-Advantages of SIP Investment

The number of investors has surged tenfold in the last five years. The majority of stock investors use mutual funds. SIPs are a popular and profitable way to invest. What are SIP investment with examples are discuss in this article; as well as why they are a good way to invest in mutual funds.

Also read what are the different types of SIP? for additional knowledge on the topic. Systematic investment is easy to understand. It comprises purchasing fund or investment shares or units on a regular basis. Dollar-cost averaging is buying the same amount of an asset every time.

What is SIP Investment?

SIP investment is a method of investing in mutual funds in which a set amount is invest at regular intervals. A SIP allows you to invest a small amount over time for a larger return.

A systematic investment plan (SIP) allows consumers to put the same amount in a mutual fund, trading account, or 401(k) each month (k). SIPs enable investors to save regularly with smaller amounts and benefit from dollar-cost averaging (DCA). An investor generates wealth or a portfolio with DCA by making equal periodic cash transfers.

How Does SIP Investment Work?

When you sign up for a SIP plan, the amount you specify is debited from your bank account and invested in mutual funds. You will receive mutual fund units based on the NAV of the fund. Each SIP investment in India increases the number of market-rate units in your account. Both the amount re-invested and the return rise with each investment.

Investors can receive their money returned at the end of the SIP or at regular intervals. Here’s an illustration. Consider putting $1 lakh into a mutual fund. You have two investment alternatives. One-time payments of one lakh rupees are also acceptable. Another option is a Systematic Investment Plan (SIP). SIPs demand a little initial commitment. $500. The sum of Rs 500 will thereafter be debited from your account and invested in your mutual fund. Continue until the timer goes off.

Example of SIP Investment

SIPs are available from the majority of brokerage and mutual fund companies, including Vanguard, Fidelity, and T. Rowe Price. Moreover, most SIPs are set up to make automatic payments every month, quarter, or according to a schedule specified by the investor. Investors also must have a money market account or other liquid account to fund their systematic investment plan.

Automatic Buy is the name of T. Rowe Price’s SIP. Following the initial donation, which is often $1,000 or $2,500, investors can contribute as little as $100 per month. It is applicable to IRA and taxable accounts, but not to stocks. Money can be deposit quickly from a bank account, a paycheck, or Social Security. “There are no checks or investment paperwork to mail; we handle everything,” the company’s website reads.

Benefits of SIP Investment

SIPs benefit investors. Therefore, the first and most obvious advantage is the ability to choose how much and how frequently to deposit. SIPs have various advantages over lump sum payments. Here are several examples:

Makes Wise Investments

If you are unfamiliar with the market, SIP may be the best way to invest. You do not need to research the market or decide when to invest. SIP distributes money from your account to mutual funds automatically. Unlike one-time payments, regular gifts ensure that your wealth is actively growing.

Rupees on Average

With rupee cost averaging, investors can maximize their SIP. Although, rupee cost averaging and SIP allow you to benefit from market volatility over time. The SIP fixed quantity stretches the value of the unit over time. When the market is low, you can buy more units and fewer when it is high. This lowers the unit cost.

Compounding Power

SIP is a method of investing that is disciplined and attempts to build your money. Unlike a lump payment, where you can forget to invest, automation grows your investment. Compound interest and small everyday payments add up over time.

Advantages of SIP Investment

A SIP is one method of investing in a mutual fund. Another option is to invest all of the funds at once. A SIP allows you to invest a certain amount each month. Minimum investment levels apply to mutual funds. Moreover, online SIP calculators can assist you in determining whether SIP is appropriate for your investment objectives. Discover why SIPs are so popular. This article highlights the advantages of SIPs.

Sip Investment Support Saving and Investing

People wish they had more money to save. This SIP option allows you to invest on a monthly basis. This allows you to save before you spend. It allows you to establish financial control gradually and reap the benefits later.

Don’t Stress about Purchasing or Selling Timing

Market and timing worries are eliminated with SIP techniques. This is beneficial. When the market is overly high, you’ll get fewer shares for the same price. Averaging is effective, and your portfolio will be well-balance as a result.

Do Not Mix Investments and Emotions

Allow your emotions to impact your stock market decisions at all times. The stock market is always evolving. Don’t make decisions based on market data. SIPs have still another significant impact. Market swings may not persuade you if you have investment discipline.

SIP Investment – Keep it Simple

SIPs begin at 500 INR per month. Even if your income or savings are limited; you can benefit from the Indian stock market’s rise by investing in SIP plans in various mutual funds.

If Funds are Tight, don’t Buy

You may not always have enough money to invest in a SIP. Relax. SIPs have no fees or penalties for missing a month. Unlike an RD or FD, you can invest monthly.

Compounding is Beneficial

SIP earnings are re-invested monthly until your investment is paid off. Compounding multiplies your investment exponentially.

You can Pause at any Time

The majority of SIPs do not have any early termination fees or penalties. On your Demat account, click “Unsubscribe.” Fixed and recurring deposits do not provide this.

Extra Money? Start Another SIP Investment

If you got a promotion or started making more money each month, you might start a second SIP plan in a different industry or sector. So, invest your extra money to make a profit.

Past Performance

15-year-olds who invested in mutual funds are now reaping significant rewards. Here are several examples: A Rs3,000 monthly SIP in a mutual fund would have yielded Rs5.4 million 15 years ago. Your investment would be 350,000 rupees.


Systematic investing entails investing the same amount in the same security on a regular basis. A SIP investment is a long-term commitment that includes automatic withdrawals from the investor’s account. price to cost averaging method is use while investing in SIPs. Stay informed by reading more to learn more about the margin trading subject.

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