Top 5 Reasons to invest in SIP

Why SIP is important?

Before knowing that why SIP is important you should know what is SIP. It is a smart financial planning tool that helps you to create wealth. SIP is systematic investment plan, that means a fixed amount of money is debited by the investor’s bank account periodically and invested in a specific mutual fund. The investor is allocated a number of units according to the current NAV. Every time a sum is invested, more units are added to the investor’s account.

It helps in becoming disciplined about investing

One of the most important reason is, it helps you to build a habit of investing. You can invest Rs. 500 to 5000 or more in a month. So at the end of the year you at least have some investments which will help you. There are some companies who even offer SIP’s 100 in a month which is not a huge amount.

You can stop the SIP anytime

There is no fine if you want to stop it. But in RD there is a fine if you want to stop it. After you stop a SIP, you just can transfer that amount on your bank or you just can invest in mutual fund.

You can start a new SIP if you have more money

If you are earning more money and you want to invest it then you can start a new SIP as your old SIP was going. You can invest that in another fund and on that way you can save more money.

It minimizes the risk of equity fluctuations

As investing through SIP involves making a periodic investment in the equities through equity mutual fund, you’re able to ride through the ups and downs of equities with great ease. When the market goes up, you earn fewer units and when it falls, you receive more units. As a result, you can continue making investments over a period of time (regardless of the market situations), there is nothing like correctly timing the investments to worry about.

You do not need to worry about timing market

You must have heard that you shouldn’t invest in an inflated market. When you invest using an SIP plan, you do not need to worry about timing your investment at all. At times when the markets are high, your monthly SIP buys you less number of units of a mutual fund. When the markets are low, the same monthly SIP amount buys you more units. Therefore in the long term, you do not pay very high prices for any unit of a mutual fund. This is called rupee cost averaging.

Documents Proof

KYC DOCUMENTS

Pan Card
AAdhar Card
Voter’s ID
Passport Size Photo
Download the KYC form available on the official website of SIP you want to invset.

Eligibility criteria

Adult citizens residing in India.
Minor through legal guardians/parents.
Limited liability partnership.
Religious and charitable trusts.
Banking and financial institutions
Mutual Funds or Alternative Investment Funds which have registrations under the Securities and Exchange Board of India
The Karta of Hindu Undivided Family (HUF)
Persons of Indian origin residing abroad (PIOs) or Non-Resident Indians can apply for subscription either on repatriation basis or on non-repatriation basis (permitted under Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000)
Foreign Institutional Investors (FIIs) who have registration under the Securities and Exchange Board of India on repatriation basis (permitted under Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000)
Mutual Funds or Alternative Investment Funds which have registrations under the Securities and Exchange Board of India
Other schemes of Mutual Funds subject to the conditions and limits prescribed by SEBI Regulations.