An SIP for every dream. Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to create wealth, by investing small sums of money every month, over a period of time. Investing at an early stage of life lets you enjoy the benefits of two powerful strategies, rupee cost averaging and the power of compounding.SBI Mutual Funds brings you the convenience of starting yourSIP online! Now start your SIP from convenience of your home with just few clicks.How SIP works?SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. An SIP is generally preferred for an equity scheme and can be started with as small as Rs 500 per month.The biggest advantage of SIP is that one need not time the market. In timing the market, one can miss the larger rally and may stay out while markets were doing well or may enter at a wrong time when either valuation have peaked or markets are on the verge of declining. Rather than timing the market, investing every month will ensure that one is invested at the highand the low, and make the best out of an opportunity that could be tough to predict in advance. SIPs thus make the volatility in the market work in favour of an investorand help in averaging out the cost called “Rupee Cost Averaging”. For example, with Rs 1000 one can buy 50 units at Rs 20 per unit or 100 units at Rs.10 per unit depending upon whether the market is up or down. Thus, more units are purchased when a schemes’ NAV is low and fewer units when the NAV is high. Hence, when the two cases are taken together, cost is averaged out. The longer the time-frame, the larger are the benefits of averaging.SIPs also help in availing benefits of compounding. This means the earlier one starts an SIP and longer the investment horizon, the larger the benefits. The reason being, each rupee one invests earns a return, which ends up as more rupees to earn a return, allowing investment to grow at a fast pace. Higher rates of return or longer investment time periods increase the principal amount in geometric proportions. This is the single most important reason for investors to start investing early and keep on investingon a regular basis to achieve the long-term financial goals.In short - Why SIP?Disciplined approach to investmentsNo need to time the marketHarness the power of two powerful Investment strategies:*.Rupee Cost Averaging - Benefit from Volatility*.Power of Compounding - Small investments create Big Kitty over timeLighter on the wallet Reap benefits of starting early.
Posted on: Thu, 01 Jan 2015 02:11:02 +0000
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