What is a Systematic Investment Plan (SIP)?
Discover how Systematic Investment Plans (SIPs) work, understand Rupee Cost Averaging, and calculate your future wealth.
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Understanding SIPs
A Systematic Investment Plan (SIP) is a method of investing a fixed sum, regularly, in a mutual fund scheme. Instead of trying to time the market with a lump sum, you invest a small amount every month.
The Power of Rupee Cost Averaging
The biggest advantage of a SIP is Rupee Cost Averaging.
- When the market goes down, your fixed investment buys more units.
- When the market goes up, your fixed investment buys fewer units. Over time, this averages out the cost of your investments and protects you from market crashes.
The Power of Compounding
By starting early, even a small SIP of $5,000 per month can grow into Crores over 20-30 years due to the magic of compound interest.