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Know The Systematic Investment Plan Basic Before Investing


To reach your financial goals you need to invest. Investing is the traditional saving instruments like FDs is not enough. To achieve your dreams you have to invest. Mutual funds are a smart investment option.

You can invest in mutual funds through systematic investment plan (SIP). SIP allows you to invest a fixed sum of money regularly in mutual funds. It is a disciplined way of investing in mutual funds.

You can invest a small amount of money regularly over a period of time to reach your financial goals. SIP is a convenient tool as it allows you to break your big financial goals into small amounts. You can invest small amount of money regularly through SIP to reach your big goals. You can start your SIP and do the subsequent installments monthly or quarterly. These are the systematic investment plan basics.

SIP supports the power of compounding. In compounding you earn interest on the initial invested amount and also the previously earned interest. The longer you stay invested the more the benefit of compounding. You should start early to enjoy the benefits of compounding.

The basic systematic investment plan benefits are as follows:

When you invest regularly a fixed amount you can avoid timing the market. The long term investments are not affected by market volatilities.

As you invest a fixed sum regularly you can buy more units when the market is low and less when the market is high. This brings down the average cost of acquisition of units. It is called Rupee Cost Averaging.

As you channelise your fund into mutual funds investments they can turn into future wealth creating investments.

Kotak Mutual Funds offers financial advisors who can guide you to invest in the mutual funds. The financial advisor tracks the various sectors and companies and invests on your behalf.


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Systematic Investment Plan Basics | Image Resource : freepik.com


SIP strategies

There are different basic SIP strategies which you can follows while investing. The SIP strategies are as follows:

Simple SIP

When you follow this strategy you can invest a fixed amount of SIP for the entire tenure.

Smart SIP

In this you can invest the regular SIP when the market is high and a higher SIP when the markets are cheap.

Growing SIP

In this you can increase your investment gradually as you income grows.

Target SIP

In this you can invest to bridge the gap between the actual amount and the target amount.

Kotak Mutual Funds offers all the four strategies to its investors.