What are the advantages of systematic investment(SIP)?.Is it a good tme for starting SIP?

Question

What are the advantages of systematic investment(SIP)?.Is it a good tme for starting SIP?

Answer 1

SIP Basics

Are you ready to think big? Start small!

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We all need to provide for something. It could be planning for a home, children's education, or retirement. But how do you get started, especially if you don't have a large sum of money?

The simple solution is to begin a SIP or Systematic Investment Plan.

Just as you can buy a car or a home by paying monthly instalments, you can invest in the stock market in easy instalments for your future. In fact, investing just Rs. 500 at a time can help you benefit from the growth potential of mutual funds.

Why is SIP - A smart move

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If you want to put aside just a small amount regularly, you can plan a SIP as part of your monthly budget.

Or, if you have a lump sum, but do not want to invest all of it, a SIP can be a smart move. It helps you to build your portfolio one step at a time and also helps you to ride over market volatility.

But above all, you benefit from 'rupee cost averaging': If the market goes up, the units you own will increase in value. If it goes down, your next payment will buy more units. Check out the figures for yourself. https://www.fidelity.co.in/learning_cent...

Discipline is the key

Any time is good to start a SIP. If you are regular with your installments.

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How can you pin-point the best time to invest in a SIP, especially if the market is hitting record highs? The answer is simple. Choose any time! But you don't need to take our word for it.

In the example below an investor began a SIP of Rs 1,000 every month in a simulated equity mutual fund from the market peak of February 2000 through March 2008. Conventional wisdom would not have advised beginning an investment at this point as a tech-driven high was followed by one of the most precipitous falls in the history of the Indian stock market.

However, history tells us quite a different story. Two years of being mired in a bear market actually meant two years of buying units at low prices. When the market took off in 2003, the SIP investor's patience and discipline would have been suitably rewarded. Check this out at https://www.fidelity.co.in/learning_cent...

The best part is market is right now at record lows, so this is a good time as any to start a SIP. Actually I would recommend that if you are planning a monthly Rs.1000 SIP, start with 5x the amount now i.e. Rs. 5000 as initial amount , and then Rs. 1000 every month.

Now that you are convinced of the utility of SIP, and why SIP is a smart move, why you need to be regular with your installments, (hopefully:-)), you are ready to invest.

But where, which funds have the potential to give me the best returns, which are the top rated funds, that will be your next logical question, right? Not to worry, there's another fantastic site that will give you all the answers you need and more. Check out the top rated funds at

Top Rated Funds

http://www.valueresearchonline.com/topra...

Good luck! Start today!

Answer 2

With SIP you can invest small amounts periodically in Mutual funds.  In this way, investments does not appear to be a burden every month.

Secondly to prevent losses in volatile markets, investing in SIPs is  the best option as every month you may get an opportunity to buy at lower levels.

Answer 3

The biggest advantage is cost averaging which means over time, with the up-down movement of stocks, the risk reduces and your gains increase. Investing in an SIP of an Equity fund is one of the best ways to beat inflation.

Answer 4

systematic investment plan is an agreement to invest in a particular schme a fixed amount periodically.  the spread of purchase over a period of time evens out the market fluctuation and u r saved from the task of timing the market.

personally, i feel sip shud not be opted. it will be better to invest small amounts at convenience from time to time through self discipine. sip unnecessarily ties u to a particular scheme and also ties u to invest fixed amount at stated intervals. hence, one shud invest according to his own convenience from time to time not necessarily in a particular scheme. or a particular fund.