Understanding the Basics of SIP.
                     UNDERSTANDING THE 
BASICS OF SIP
WHAT IS AN 
SIP?
An SIP allows an investor to invest a 
fixed amount regularly in a mutual 
fund scheme, typically an equity 
mutual fund scheme.
Source: 
economictimes.in
HOW SIPS 
WORK?
 Mutual fund and other investment 
companies offer investors a variety 
of investment options including 
systematic investment plans. 
 SIPs give investors a chance to 
invest small sums of money over a 
longer period of time rather than 
having to make large lump sums all 
at once. 
 Most SIPs require payments into 
the plans on a consistent basis—
whether that's weekly, monthly, 
quarterly.
Source: Investopedia
WHY SHOULD 
YOU SIP?
 It imparts financial discipline to 
your life. It also helps you to 
invest regularly without wrestling 
with market mood, index level, 
etc.
 The money is automatically 
invested regularly in a scheme 
without any effort on your part.
Source: Investopedia
WHAT ARE THE OTHER 
BENEFITS OF SIPS?
 SIPs help you to average your 
purchase cost and maximize 
returns. 
 When you invest regularly over a 
period irrespective of the market 
conditions, you would get more 
units when the market is low and 
less units when the market is 
high. 
Source: YouTube
HOW MUCH MONEY DO YOU NEED 
TO START AN SIP?
 You can start investing in a mutual 
fund scheme via SIP with a 
minimum of Rs 500.
Source: Investopedia
ADVANTAGES
 The first, and most obvious, 
benefit is that once you set the 
amount you wish to invest and the 
frequency, there's not much more 
to do. 
 Since many SIPs are funded 
automatically, you just have to 
make sure the funding account 
has enough money to cover your 
contributions. 
 It also allows you to use a small 
amount so you don't feel the 
effects of a big lump sum being 
withdrawn all at once.
Source: The Financial 
Express
DISADVANTAGES
 Lack of flexibility
 You can not keep SIP running till 
last year of your investment. 
 Your investment start earning 
immediately when you make lump 
sum investment, whereas in case 
of SIP, only monthly amount 
invested starts earning 
immediately and remaining 
amount start earning when 
actually SIP amount is invested 
over next few years.
Source: Investopedia
CUSTOMIZE SIP
 Though the most popular SIP is 
investing a fixed amount every 
month, investors can customize 
the way they put money via SIPs. 
 Many fund houses allow investors 
to invest monthly, bi-monthly and 
fortnightly, according to their 
convenience.
Source: Investopedia
WHY MUST YOU CONSIDER 
MONTHLY SIPS?
 A daily SIP may be not allowed by 
all Mutual Funds and hence your 
options might be limited. Monthly 
SIP options are available with 
almost all Mutual Funds. The same 
goes for quarterly SIPs.
 Since we are used to planning on a 
monthly basis, monthly SIPs will 
allow you to plan your expenses 
such that your investments are not 
compromised.
 Daily SIPs will make tax 
calculations more difficult if you 
plan to remain invested for a short 
period of time. 
Source: Media
KEY TAKEAWAYS
 A systematic investment plan 
involves investing a consistent 
sum of money regularly, and 
usually into the same security.
 A SIP generally pulls automatic 
withdrawals from the funding 
account and may require extended 
commitments from the investor.
 SIPs operate on the principle of 
dollar-cost averaging.
 Most brokerages and mutual fund 
companies offer SIPs.
Source: Investopedia