Mutual Funds come in many types and SIP is one among them. SIP is an acronym, commonly used to represent “Systematic Investment Plan”. So, according to this name, it is quite relevant that SIP is basically a way or plan of investment. To be even more specific, Mutual Funds SIP is a method to plan your investment rather than the investment scheme itself.
With accordance to the present day market, SIP is the most viable way to pile money over a certain period of time. As you have to invest monthly in an SIP, it is not a huge deal to arrange for the money. Also, what is usually spent off in the day to day life is saved and collected when you decide to invest in an SIP. Even a small amount, for example 1000 INR is a good investment if you are in the early stages of your career.
There are ample advantages of investing in an SIP. Compared to other investment or saving schemes such as the savings account or the recurring deposit accounts, SIPs have a higher interest rate and thus generates greater returns. It is pretty easy to start an SIP, just with your instructions the certain sum of money you choose to invest in the scheme will be deducted from your account every month. So it is made quite hassle free and convenient for the investor, reducing the effort required on their part to the minimum.
However, the benefit of SIP is best reaped when you choose to invest in long term plans. In case of long term investments, more time is available for the money to multiply. So, what seemed to appear as a low cost investment at the initial stages, fluffs up and gives you comparatively huge lump sum return with the magic of time. That is actually a great advantage from an investor’s point of view.
