What is SIP ?
SIP is a way of investing in mutual funds. The full form of SIP is a Systematic Investment Plan. SIP usually allows you to invest weekly, quarterly or monthly. You can start it through your bank or broker. The SIP calculator is a tool that helps you determine what percentage of returns you will get in the future by investing your money in such investment instruments.
Benefits of SIP as compare to Lumpsum investment
- You don't need to speculate or focus on timing the market (which isn't the right way for generating returns over long term)
- Amount is invested on monthly basis, so there is little to no impact of market volatility (unit cost averaging)
- Passive and automated (monthly installments can be deducted automatically) approach makes you more committed to guranteed saving/investment
- It's very flexible - you can create/update/cancel SIP anytime. Most of the funds starts as low as Rs. 1000 per month
If you're not sure where to start or how to pick a mutual fund, then you should check out Top 10 Mutual funds listed there, from various fund classes(Debt, Liquid, Large Cap, Small & Mid Cap, ELSS etc), based on the recent performance (last 5 years) and CRISIL Ratings.
