What is SIP investing in Mutual Fund and SIP benefits
SIP in Mutual Funds means Systematic Investment Plan in Mutual Funds. This is a special type of invest scheme for the salaried people of India to invest monthly on a regular basis in a Mutual Fund scheme.
Every time an investor pays the monthly SIP instalment, he gets some mutual fund units at the NAV: Net Asset Value of the mutual fund he is investing into. Thus every month Units are being added to his holdings of the Mutual Fund. This gradually builds up a fortune for the investor.
SIP in Mutual Funds advantages
The advantage of SIP investment in mutual funds is that it encourages people to make regular investments in small amounts. SIPs are flexible in that if in any month the investor cannot pay the monthly SIP instalment, he can stop investing in SIP plan at any time, and then restart investing in the same SIP plan when he can afford to pay the SIP amount.
The SIP plans also allow a person to increase or decrease his SIP monthly plans. You can pay SIP monthly payments with a standing instruction in your Bank Account. SIP investments also have tax exemptions, and this encourages a lot of people to start SIP investments in Mutual Funds.