What Is Systematic Investment Plan And Its Benefits

Mutual funds are a smart tool to invest in. By investing in mutual funds you can reach your financial goals. Systematic investment plan (SIP) allows you to invest a fixed amount of money regularly in mutual funds.

SIP is a convenient and a disciplined way of investing. It allows you to break your big goals into small amounts. You can invest small amounts regularly to reach your big goal. You can invest monthly or quarterly as per your needs. It allows you invest small amounts regularly in a disciplined way without affecting your household budget.

There are many benefits of investing through SIP. They are:

As you invest a fixed sum regularly you do not have to time the market. The long term investments are not affected by market volatilities.

As you invest regularly a fixed sum you can buy more units when the market is low and less wehn the market is high. This brings down the average cost of acquisition of units. It is called Rupee Cost Averaging.

When you invest in mutual funds your funds get channelized into future wealth creating investments which is a better option then keeping the funds idle.

Systematic Investment Plan

Systematic Investment Plan | Image Resource : freepik.com

This explains what is systematic investment plan and its benefits.

Kotak Mutual Funds offers mutual funds product. It also offers financial advisors who can guide you on how to invest in systematic investment plan.

Different options in SIP

There are different options available in SIP. They are as follows:

SIP booster facility

This facility allows you to increase your regular SIP installment amount at predefined intervals. You can begin with a small amount initially and increase it later on. You can register for this facility and then you just have to give instructions to increase your SIP installment amount. It is a convenient process. You can boost your investments using this facility. There are many benefits of this facility. They are:

  • You can increase your investment even without realising it. 

  • You can manage your income to investment ratio better. 

  • Earn better returns on your investments. 

Flex SIP

This option allows you to invest a higher amount automatically when the market valuation is low and while the market is high it allows you to invest the regular amount. It is like the regular SIP but the amount to be invested is not fixed. It depends on the price-to-earning ratio.

Kotak Mutual Funds offers both these facilities to its investors.