Systematic Investment Plan (SIP)

• A disciplined investment approach to mutual funds

• Invest a fixed amount at regular intervals (monthly, quarterly, half-yearly, or yearly)

• Minimum investment: Rs. 500/month (can vary depending on the fund)

• Longer investment period = higher returns

Understanding SIP

• Save for specific goals, such as:

  • Children's education

  • Marriage

  • Retirement

  • Buying a home

• Example:

  • Invest Rs. 1000/month for 20 years = Rs. 2.40 lakhs (principal amount)

  • Bank interest (6.5%): Rs. 4.90 lakhs (total value)

  • Mutual Fund SIP (12% estimated return): Rs. 10 lakhs (total value)

The Power of Compounding

• Continue investing Rs. 1000/month for 5 more years:

  • Principal amount: Rs. 3 lakhs (additional investment)

  • Total value: Rs. 19 lakhs (compounded return)

• Compounding yields significant returns over time, making your money grow faster

• SIP helps you:

  • Invest regularly

  • Reduce market volatility

  • Benefit from compounding

Benefits of SIP

• Flexibility: Invest monthly, quarterly, or at other intervals

• Convenience: Automated investments

• Discipline: Regular investments, reducing emotional bias

• Rupee-cost averaging: Reduces market volatility

• Compounding: Accelerates wealth creation

By investing through SIP, you can harness the power of compounding, reduce market volatility, and achieve your long-term financial goals.