What is SIP and how does it work?

Do you know what is SIP a (systematic investment plan)? You must have seen many posts related to SIP on your Smartphone or Laptop. But you are doing not know What is SIP, then through this post, we’ll introduce you to all or any knowledge associated with SIP i.e. Systematic Investment Plan. What is SIP and how does it work? Through this post of ours, you will be given all the information about this SIP. There are many ways to save, but in addition to saving, increasing the amount of that savings is actually savings.

We can invest or invest the quantity of savings in many places and make a profit. But if we would like to urge regular and balanced money, then we should always invest the saved amount through SIP. By doing SIP, not only are we increasing the amount of our money savings but through this, we also get an exemption in Income Tax. Initially, people had confusion about SIP and that they considered it harmful, so today our post will attempt to break that confusion of these people and every one the important information associated with SIP and it’ll be shared with you.

What is SIP

What is SIP

We have heard many times that the ocean is formed by small drops and this is also 100 percent correct. The same applies in the case of SIP investment. The same applies in the case of investment as well. It is not at all necessary in the SIP and Share Market that we always have to make a big investment to earn a large amount.

Doing this may put an unnecessary burden on the financial condition of the person because, in the course of making big investments, he will keep his financial condition in check. Therefore, if small investments are made regularly, then within the futurean outsized fund is often prepared with no risk. SIP works in a similar way.

SIP may be a very easy thanks to investing with low losses. during which you’ll but an enormous goal by investing a hard and fast amount every month/interval, then a bit of investment you’ll get an enormous amount during a whileopen-end fund in Demat Account in Equity Fund Through SIP, the investor has got to invest a particular amount within the stock exchangeopen-end fund or gold, etc. for a fixed period, those people who are not much aware of the stock market and those who are unaware of how the market works. For this, investing through SIP is a better solution. In What is SIP, a fixed amount has to be invested at fixed time intervals. The SIP entails investing a specified amount of money at fixed time intervals. An investor can invest within the stock exchangeopen-end fund, and GOLD ETF through SIP

SIP has brought mutual funds in the reach of middle-class people as it is made for those who have a low budget for investment. Those who are unable to invest big at one time but invest 500 or 1000 ₹ every month. Can. So through SIP, he has come into the reach of such people. Middle-class people can earn big profits by making small investments for an extended time.


In SIP, you invest a particular amount monthly and buy Units by investing within the fund of a corporationfor instance, the NAV of a company’s fund is 10 ₹ and by investing 1000 ₹ you get 100 units of that company reciprocally. Will take And whenever you want to get out, you can get profit by selling those units you bought at the price of the market running at that time.

Benefits of SIP

Let’s know what’s the advantage of SIP: –
1) Small investment – As we all know that it’s necessary to take a position a particular amount regularly at fixed intervals, so it’s very easy to withdraw funds for investing from your routine and expenses.

You can get a large amount by investing a small amount regularly for a long time in a fixed interval.

If you invest 1000 ₹ every month at the rate of 10 percent interest return, then in 15 years you will get around 415,000 ₹ on completion of your investment period. Whereas in these 15years you must have accumulated only 1,80,000Rs. You can start investing in SIPs even with less than 500 amount rs100, which can give you good returns in the long run.

2) Easy to invest – Nowadays it is very easy to invest in SIP. You do not need to worry too much about this. Once you have selected your plan, on a certain date, the mutual fund withdraws funds from your account and deposits them in your chosen plan.

Your bank account is linked to your SIP or Demat account. Just like your plan is to invest 1000 ₹ every month, then every month 1000 ₹ is transferred from your bank account to your SIP account. That sent money is used to buy the unit, which will benefit you in the future.

3) Risk Reduction – The biggest and the main benefit of SIP is that it reduces the risk of the stock market. Suppose you have 1 lakh rupees to invest in the stock market. You put those rupees together in stock, but now you do not know whether the stock market will go up or down the next day. Doing so would be quite a risky deal. If this investment is done in a short span of time, then it will benefit you more.

4) Tax exemption – When you invest in SIP, you do not incur any kind of tax on investing or withdrawing the amount. But tax-free plans have a lock-in period of 3 years. You can get tax exemption by investing in these schemes.

5) Systematic and disciplined investment – In order to invest in SIP, a small amount (according to your plan) is invested regularly by withdrawing from your account. With this, discipline and order are maintained in your investment process. This discipline encourages you to save and instills the habit of saving you.

6) Benefits of Compounding – The word compounding also means being interested in interest. Whenever an investment is made in SIP and whatever return is received on the amount invested, it is re-invested back in the same place, which increases the profit of the investor and in the profit of the same. Increase comes.

7) Facility to withdraw money from SIP – Most SIP schemes do not have a lock-in period. The lock-in period is the time without which you cannot withdraw your money from the plan, but most SIP schemes do not have a lock-in period. Investors can invest in SIPs and withdraw as per their requirements.

Today you can start investing in SIP at the rate of only rs500 every month. In this, you do not need to choose Mutual Fund. Most of the things in this are automatic. The benefit from SIP is very high and its loss is negligible.

If you want to save a little money from your daily life, then you should invest it through SIP. Even if that money is still small, after passing a few years and investing regularly, it will become a big fund with little money added.

What did you learn today?

I hope you guys have understood What is SIP. I request all of you readers that you too should share this information with your neighbors, relatives, and friends so that awareness among us and everyone benefits greatly from it. I need your support so that I can give you more new information. But still, if you see any deficiency in this post what is SIP, then please give your opinion in the comment box and help us to correct that deficiency, thank you.

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