We all know about Mutual Funds and investment risks but we are not aware of the term Systematic Investment Plan commonly known as SIP. What is SIP in Mutual Fund? Systematic Investment Plan (SIP) means the specific time bound mutual fund schemes that require a fixed amount of investment over a stipulated period of time. SIP can be equity based, securities based or split schemes in nature. SIP investment can be easily made by an individual, firm or company online by opening an account with the concerned investment bank, submitting the Know Your Customers form and details and receiving an OTP for the Online Banking activation.
A broker or investment bank can also have the authority to set up an account on behalf of an interested individual, firm, or company, solely for this purpose directly with the companies the investor chooses or is advised to invest in. The best feature of a SIP is the tax saving that attracts investors to invest in it for ten months to get exemption under capital gains. The SIP plans need to be compared via experts or online according to the requirement of the investors in order to provide them the best one for their investment objectives.
Once the account is verified and activated, the investor can check the various ranges of SIP schemes, their duration and return expectancy. The toughest choice is to decide upon the various types of SIP. The right SIP for an investor depends upon their will and objectives of investment. While the short term SIP investments tend to earn more returns in trustworthy schemes, the long term SIPs are less risky in nature. For the layman, who avoids the hassle of day to day market profit, losses and investments, SIP is a very good way to invest in the stock market without much experience or expert supervisions. SIP nullifies the short term losses, with the net profit amount of returns and thus, provides security to the principal amount invested.
