Quick Answer: How Do SIP Works?

How does SIP work in India?

SIP is a method of investing a fixed amount, regularly – monthly or quarterly in a mutual fund scheme.

With SIPs, you can invest an amount as small as Rs 500 per month over a period of time.

It helps you averaging out your cost of investing and benefit from the power of compounding..

Can I lose money in SIP?

So, when the price of equity falls, you should invest more instead of redeeming your investments, because redemption in low market would turn the notional loss in real loss. … It is because, under SIP, same amount is invested in equal interval and when NAV of funds are lower at low market, you would get more units.

Is it good to invest in SIP now?

Systematic investment plans or SIPs shield you from many harms. Some of them are short term risks, short term volatility, emotional and impulsive reactions, overspending and so on. SIP plans are one of the safest and most convenient ways to invest in the equity markets of India through mutual funds.

Can sip make you rich?

The power of compounding manifests in SIP when individuals reinvest their earnings and earn further interests on them in due course. It is one of such features of SIP that helps an investor with a limited sum of money to generate wealth over time.

Which SIP is best for 5 years?

Best SIP plans for 5 year investmentFund Name3-Year SIP Returns (%)5-Year SIP Returns (%)Kotak Emerging Equities Fund (Regular)6.54%9.73%INVESCO India Financial Services Fund (Regular)14.61%16.03%SBI Focused Equity Fund (Regular)12.40%12.94%Franklin Build India Fund (Regular)4.66%8.07%8 more rows•Jan 23, 2020

How does SIP works in mutual fund?

SIP is a systematic way of investing a fixed amount, on a fixed date, usually on a monthly or quarterly basis, for a fixed period of time. When investing in a mutual fund scheme you put in a lump sum amount or do it in a staggered manner using the systematic investment plan (SIP) route.