Investing & funds
What is SIP (Systematic investment plan)?
Also called: Systematic investment plan
Hinglish mein padhein: SIP kya hai?
A SIP invests a fixed amount in a mutual fund at regular intervals, usually monthly, automatically from your bank account.
Investing the same amount every month buys more units when prices are low and fewer when they are high — rupee-cost averaging.
SIPs build discipline; they don't remove the risk of the underlying market.
Example
₹5,000 a month for 15 years at an assumed 12% yearly return grows to about ₹25 lakh, of which ₹9 lakh is your own contribution.
Related terms
- Mutual fundA mutual fund pools money from many investors and invests it in stocks, bonds or both, managed by a SEBI-registered asset management company.
- CompoundingCompounding means earning returns on your past returns. Over long periods it makes money grow faster and faster.
- CAGRCAGR is the constant yearly growth rate that takes an investment from its start value to its end value over a period.