A Comprehensive Guide to SIP or Systematic Investment Plan

You often hear a lot about SIPs when you approach a financial advisor to manage your savings. It is one of the most commonly used methods to save money periodically. You should not neglect this instrument in the early stages of your career, as it can have a huge impact on your finances. Unlike traditional investment plans, SIPs inculcate a lot of financial discipline in an individual and you should carefully consider its advantages when looking at investment options. So, let us take some time out and discuss the various aspects of SIPs in detail.

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What exactly is SIP?

Systematic Investment Plan, as it is referred to in financial terms, allows an investor to regularly invest some amount of money in the financial market. With this plan, the investor has complete flexibility to choose an amount, according to his/her financial situation, and invest the money in the mutual fund market.

There is no need to worry about the highs and lows of the financial market as the mutual funds are handled by experts, and investing every month gives you the advantage of rupee-cost averaging so you will not be stuck with highly priced instruments. It is also possible to withdraw the money at a later stage and this is the main advantage of choosing such plans.

Why should you save money regularly with SIPs?

You should always make it a point to save money for your future expenses. Remember that misfortune can come anytime and you need to be prepared to handle any situation efficiently. Without substantial savings, you will be left with no other option but to borrow money for your emergency financial needs. This can spiral into a huge burden as you will have to pay interest for the borrowed money. On the other hand, when you save regularly, it will accumulate into a lump sum amount in the future and you will be rewarded by way of interest and profits from the investment. For this reason, you should always save money regularly and develop financial discipline early in your life. Ideally, you should begin saving right from your first income. This will ensure that you always have enough savings to deal with emergency situations in the future.

Are SIPs suited for working professionals and businessmen?

Systematic Investment Plans are suitable for anyone who wants to save money on a regular basis. If you are a working professional, you will often notice that your expenditure keeps increasing along with your earnings, thereby not increasing your savings proportionately. By choosing SIPs, you will be motivated to save some money regularly and it will provide you with good returns in the future as well. In the same manner, even businessmen should also consider such plans as there is no guaranteed income allotted for them. It is possible to change the amount reserved for your SIP investment, according to your financial condition, and this flexibility is particularly useful for the self-employed.

Why SIPs are better than investing in individual stocks?

In normal circumstances, most people invest money in the stock market whenever they have some additional funds. However, the profit they make from the stock market depends upon the price of the stocks at the time of their entry. In the same way, they also need to exit the stocks at the right time when the price is high in the market. Very few people are lucky enough to enter all the stocks at low prices and sell them at high prices. Thus, there is no guarantee that people will earn money even by investing in stocks for a very long duration.

On the other hand, choosing SIP will ensure that you will be investing in similar financial instruments on a monthly basis. In this way, you will be buying financial instruments at different prices and you will not be stuck at a high price. This reduces the risk by a significant margin and you can easily get more returns from SIPs in the long run, when compared to the stock market.

Why should you avoid lump sum investment and choose SIPs?

Investing a lump sum in the financial market is like putting all your eggs in one basket. You should always avoid this and instead, invest your money in instalments. This reduces the risk and you will be able to purchase different instruments at different prices. If you continue this method for few years, your average price will usually be quite low and will fetch you good returns in the future.

If you are not able to enter the market when the price is low, you will be risking your investment in the financial market. Remember that many people get stuck after buying stocks and other instruments at very high prices and they have to wait for many years to see a similar price range for such entities. This is the biggest risk associated with investing a large sum of money at once.

SIPs are effective means to handle market volatility

Financial markets are well known for their volatility and it can get affected due to various global and local factors. In this situation, it is always a good idea to invest regularly in systematic investment plans as your average price will be able to factor the volatility in an effective way. You will also be able to take advantage of market fluctuations and capture different financial instrument at very low prices. In the same way, you need not worry if you are buying few units at very high prices as you will also be left with many units that are in the low price range and this will average out in the future.

What is Rupee Cost Averaging in SIP?

This is the biggest factor that differentiates SIP from other Investment plans in the market. In simple terms, this means that you will be investing a fixed amount of money to buy mutual fund units on regular intervals. If the price of a unit is high, you will get fewer number of units for that particular transaction. Similarly, when the units are trading at a lower value, you will get more number of units for that transaction. This does not put additional burden on your financial situation and you will have complete flexibility with regard to saving as much as you desire on a regular basis.

Benefits of choosing Systematic Investment Plans

  • You can invest small amounts of money by choosing this option.
  • The risk is diversified, to a large extent, in this plan.
  • It is possible to customize the plan according to your financial situation.
  • You can choose to increase or decrease the size of investment at a later stage, depending upon your current financial condition.
  • It gives better returns when compared to investing in individual stocks.
  • It will develop financial discipline in individuals and they will be left with significant savings to fulfill their future requirements.
  • You can even choose the plan on a monthly or bi-monthly basis, according to your convenience.
  • Some SIP schemes can also provide you with different tax benefits, under section 80C of the Income Tax Act.
  • There is no need to constantly research the future direction of the market when you choose to invest on a regular basis.
  • Temporary fluctuations in the market will not affect the investment in the long run.
  • This is the most effective way to average the cost of purchasing mutual fund units in the long run so you can get the best returns.
  • SIPs also provide compounded returns which can drastically increase your earnings in future.

How to invest in SIPs?

It is very easy how to invest your money in SIPs, all you need to do is to consult your investment advisor about a suitable plan. You can choose from the online trading accounts and handle all the transactions over the internet. It is also possible to approach your bank and enquire about different options available with them in this regard. You can even provide the authority to the financial service provider to withdraw certain amount of money from your bank account and this can be invested in the mutual funds. In this way, you will not have to manually process the transactions on a regular basis.

Investing need not be a difficult task and you can easily take the stress out of the entire concept by choosing the systematic investment plans. These are very effective and give excellent returns in the long run. It is also a good idea to invest in multiple plans so that the bad performance of one plan will not affect your overall savings and you will be able to get good returns.

How to Calculate using an online SIP calculator?

You can use an SIP calculator to know the expected returns from your monthly SIP investment and wealth gain. It gives you a rough estimation on the maturity amount for a monthly SIP without any manual calculation, as per the estimated rate of return.

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A Comprehensive Guide to SIP or Systematic Investment Plan Reviews & Ratings

4.3 / 5 (Based on 25 Reviews)
(Showing Newest 25 reviews)
Raj
Ooty, September 02, 2020
Start with minimum amount
I have recently got the SIP plan from the policybazaar and it is really easy to get the plan from the online market. Not only this you can also start from the minimum amount of Rs. 500. It is very much convenient in nature and I really love my plan. Thank you policybazaar.
Adnan
Kohima, September 02, 2020
Great assistance
I have got the good amount of benefits from the policybazaar. The customer care team of policybazaar is very good and they understood my query very well. Thank you so much team for better assistance.
Suraj
Yamunanagar, September 01, 2020
Long term and beneficial
It is always a preferred thing that to get the SIP plan for the longer period of time. I really like the plan as I wanted it to be invested for at-least 10-12 years so that I can get the optimum profit out of the same. Thank you policybazaar.
Sonu
Bhilaad, September 01, 2020
Investment plan
I have taken the pension plan from the policybazaar and it is one of the best investment plan. It has the long term effect on the person and I can easily invest and can get the better returns in the future. Thank you policybazaar.
Ananya
Islampur, May 25, 2020
Online process
The whole process of buying the policy is on online basis. It was quite easy as I searched on website and explored various plans. I found it good and bought one.
Ashish
Sarsawa, May 24, 2020
Convenience
I am very impressed with the services of policybazaar. They are really quick. Also, it is very convenient to buy the investment plan.
Kushal
East Midnapore, May 23, 2020
Long term gains
It is the process of long term gain and to sustain our future from certain hurdles. As the things have become expensive and we should save money. So, these investments plans helps in saving money.
Divyanshu
Hagaribommanahalli, May 22, 2020
Great support system
I love the services of policybazaar and the employees working there. It’s really nice that they gave me a lot many choices related to the investment plans. Unique way to invest.
Vijay
Mansur, May 21, 2020
Choices are given
While you are planning to take the SIP from policybazaar. You can have a lot many choices to choose out of different investment plans. I got the best one and I like it.
Manish
R.g.pur, May 11, 2020
A call away
I am happy that I bought my SIP plan from policybazaar. As they are just a call away. I was having a problem with my SIP and they resolved in few minutes.
Kishan
Sialhawk, May 10, 2020
Flexibility
I can see that SIP are flexible in nature. We can choose any kind of Mutual fund and also the amount which we have to invest. Quite simple.
Jatin
Vizianagaram, May 10, 2020
Helps in financial way
It helps me in dealing with financial things. As nowadays everything has become too costly. But with the help of SIP I can manage with my finances and can save money every month for a long term investment.
Vijay
Dabhoda, May 09, 2020
Good customer service
The customer service team of policybazaar is very nice. I was in a doubt before buying a SIP plan, but with the help of them I got to know about a best plan which is according to my budget.
Rakesh
Adimali, May 07, 2020
Best Returns
I recently purchased the SIP plan for me and for my wife. I found it totally good and apt for us. It is a long term investments with great number of benefits. Thank you team policybazaar for such nice plan.
Tripti
Agalpur, April 08, 2020
One stop and best plans
I got the SIP plan with the help of policybazaar. It is one stop solution. With great returns and monthly plan I am very satisfied. If so ever I need help from the customer care team they are available to help me.
Madhuban
Zotlang, April 06, 2020
Great Returns
It is a great source of return. I have started doing it from last 2 years and I am feeling relaxed that after a certain age I would be having a good amount of money with better returns.
Mustafir
Agra, April 03, 2020
Good policy
SIP plan is quite trending and useful nowadays. It has reflected a great impact on our society. As people are more concern about future planning and saving the money. Even the SIP plans gives us good returns after a certain period of time.
Varun
Adivada, March 31, 2020
Good customer care
The customer care team is quite helpful and nice. I got full and accurate information from them. They are not so disturbing. They have a good knowledge related to the product.
Vaibhav
Ahmedpur, March 27, 2020
Easy to get plan
It is easy to get the plan. I just visited the website of policybazaar. And I got various plans. Then I called the customer care team and they explained me about each and every plan. I chose the best one.
Subhas
Ahmedpur, March 23, 2020
Good plans
I visited the website of policybazaar and found good number of plans for future savings and investments. SIP is very important for everyone who wants a good satisfaction and more savings in his or her life. I would love to recommend all these plans to my friends and family.
Keshavkant
Jatga, January 20, 2020
Reach Your Goals
After a certain period of time you can reach your goal. I have seen that higher you invest there will be higher risk but you can earn well. But lower the investment low risk and low returns. Well, I have started with a less amount so that I can check and analyse. But gradually after sometime I will get a good amount. Thanks policybazaar.
Jaikant
Pathankot, January 13, 2020
Earn Money on your Investment
It is a good way to invest money and you can earn benefits and profits in your money only. A convenient way to invest and utilise your amount. Initially I found it little bit confusing but after a while everything is being okay. People who are planning in a long term investments can do such things.
Sailja
Satlasana, January 08, 2020
Systematic Investment Plan
It is a good plan. My friend recommended me to get this plan so that I can invest some amount of money into this. Ultimately I will gain benefits after a certain period of time. It is a good plan by policybazaar and I would recommend to everyone.
Zakir
Machantola, December 31, 2019
Systematic way for making money
I have gone through the plans of policybazaar. And found that it is a systematic way to invest and gain money. The whole process is simple and you can check on time to time basis regarding your investments.
Vishal
Ara, December 26, 2019
Good Returns In Long Term
I feel that while investing into this plan I have gained knowledge regarding the same. Also, after a certain good investment I will get the good returns. Though it is long term process but surely will be good for my future. Thank you team policybazaar.
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