SYSTEMATIC INVESTMENT PLAN

STRATEGY OF SYSTEMATIC INVESTMENT

SIP stands for Systematic Investment Plan, is an investment strategy wherein an investor needs to invest the same amount of money in a particular mutual fund at every stipulated time period in order to get good return with systematic cycle return and continuing investment.

Investment

Description: Investing in SIP enables an investor to take part in the stock markets without actively timing them and he/she can benefit by buying more units when the price falls and less units when the price rises. This scheme helps reduce the average cost per unit of investment through a method called Rupee Cost Averaging.

For Example: If a person invests Rs 1000 for ten months in SIP. We will find out that the AAPC i.e (Actual Average Purchase Cost) of asset would be lower than the average NAV i.e (Net Asset Value) of his investment over 10 months, which is the key benefit of Rupee Cost Averaging.

 

Actual average purchase cost as per SIP = (1000X10)/ (100+200+67+71+67+50+45+40+37+34) = 14.06. This cycle process will help in building up your monetary gain by multiplying it in various sector.

 

While investing one must check with the advisor regarding the risk.

 

Following are the tips before you invest in Mutual Fund with SIP:

1. Have a investment objectives.

2. Read carefully the offer documents, regarding Company and its performance and its risk factor.

3. Take some financial advisor without hesitating. Remember you cannot click your best pics without others help.

4. Deal only with registered intermediaries.

5. Approved by Security Exchange Board of your country.

6. Conduct your own research.

7. Keeping regular track of NAV of your investment.

8. Beware of fixed/guaranteed return scheme.

9. Aware of, market risk, inflation risk, credit risk, and interest risk.

10. Be a part of investor forum and fight for your own rights.

Systematic Investment Plan