All About Systematic Investment Plan

Mutual funds are a way for people of all income levels to invest in a way that is tailored to their individual risk and investment goals. Systematic Investment Plans (SIPs) are a way for people to invest a small amount of money each month, in order to build a larger investment portfolio over time.

The distribution of wealth in India is non-uniform, with most of the population falling into the middle-income group. This can be considered the origin of the misconception that only the wealthy can invest money while others should save it for their future needs. One of the distinctive features of mutual funds is that they offer investment avenues to people falling in different age groups, risk appetites, and income brackets. Does that mean that even anyone can invest in a suitable mutual fund?

This is where the concept of SIP or Systematic Investment Plan comes into the picture. Depending on the scheme you select, its minimum investment criteria, and your income profile, you can start a SIP and keep investing money toward achieving specific life goals. For example, you can start a SIP of Rs. 500 per month - an amount anyone can easily afford, in an index fund of your choice to build your investment portfolio. SIP can be considered an alternative to lumpsum investments in mutual fund schemes that require a larger amount at once. Of course, shelling out a small amount per month for a SIP is much easier for many individuals than setting aside a big amount for investment purposes.

-          economictimes