What Is SIP ? Systematic Investment Plan :
What Is SIP ?
Systematic Investment Plan, or SIP :
One way to invest in mutual funds is through a Systematic Investment Plan (SIP). In this case, an investor chooses a mutual fund plan and makes recurring investments of a predetermined amount.
Rather than making a substantial one-time commitment, the SIP investment strategy emphasizes making incremental investments over time. This approach frequently yields higher profits.
How Does SIP Operate ?
Gaining the most returns with the least amount of investment requires an understanding of how SIP operates. To understand how it works, take the following actions:
Steps for a SIP Investment Plan :
1. Research Thoroughly: Explore the best SIP plans available for investment that align with your financial goals and risk profile.
2. Choose the Right Fund: Pick a fund that matches your financial aspirations and risk appetite.
3. Set Investment Frequency and Amount: Decide how often and how much you want to invest in the SIP.
4. Complete KYC: Carefully complete your KYC (Know Your Customer) verification and provide bank account details for auto-debit activation to enable seamless SIP investments.
5. Allocation of Funds: Once active, the SIP amount is allocated to the chosen mutual fund scheme.
6. Fund Management: The fund manager invests the accumulated amount in different assets based on the scheme’s investment objective.
7. Unit Purchase: On the SIP date, the deducted amount from your bank account is used to purchase units at the prevailing Net Asset Value (NAV).
8. Flexibility: Enjoy the flexibility to adjust your SIP contributions as per your requirements.
9. Estimate Returns: Use online tools like the Bajaj Finserv SIP Calculator to estimate the returns based on your SIP investment plan.
Latest Statistics on SIPs in India Overview:
Systematic Investment Plans (SIPs) have become a preferred method for investing in mutual funds in India. Here are some recent statistics highlighting their growth and impact:
1. AUM Growth: As of September 2024, assets under management (AUM) through SIPs reached approximately ₹13.81 lakh crore, showcasing significant growth compared to the previous year.
2. Investor Base: The number of SIP accounts exceeded 9.874 crore, reflecting increasing acceptance among retail investors.
3. 2024 Contribution: In the first half of 2024, the total SIP contribution was around ₹1.19 lakh crore.
4. Demographics: About 45% of SIP investors are aged between 25 and 35 years, demonstrating a growing trend of long-term investment among the youth.
5. Women Investors: The percentage of women participating in SIPs has risen to nearly 30%, indicating a positive shift toward gender diversity in investments.
6. Market Performance: Despite market fluctuations, SIPs have shown resilience, delivering an average return of 10-12% over five years.
SIPs are an excellent way to build wealth systematically and are increasingly favored by investors of all demographics.
Systematic Investment Plan (SIP) Types :
The various kinds of Systematic Investment Plans (SIPs) that you can think about investing in are as follows:
1. Top-Up SIP
You can raise your investment amount on a regular basis with a Top-Up SIP. If your income increases over time and you are able to make larger investments, this is the best option. You can optimize your returns by continuously investing in the top-performing funds with a Top-Up SIP.
2. Adaptable SIP
A Flexible SIP gives you the flexibility to change the amount of your contribution, as the name implies. You can change how much you want to invest based on your requirements, tastes, and cash flow. Because of its adaptability, it can be used by those whose income fluctuates or whose financial priorities change.
3. Continuous SIP
You can keep investing with a perpetual SIP without having to stop at a certain point. SIPs usually have set lengths, like a year, three years, or five years. With a Perpetual SIP, on the other hand, you are not constrained by a set timeframe and can withdraw your invested amount whenever your financial objectives dictate.
These SIP variations provide investors specialized alternatives to increase their wealth by meeting a range of investment demands and objectives.
SIP is a good investment option.
