A Systematic Investment Plan (SIP) is a way of investing in mutual funds in which an individual selects a mutual fund scheme and invests a predetermined amount at regular intervals.
SIP investment plans involve investing a modest amount over time rather than investing a large sum all at once, which results in a better return.
How Does SIP Work?
When you apply for one or more SIP plans, the payment is automatically deducted from your bank account and invested in the mutual funds you selected at the predetermined time interval.
At the end of the day, you will be awarded units of mutual funds based on their NAV.
With each investment in a SIP plan in India, extra units are added to your account at the market rate. With each investment, the amount reinvested increases, as does the return on those investments.
The investor can choose whether to receive the returns at the end of the SIP’s tenure or at regular intervals.
