What are some unknown facts about Systematic Investment Plans

Here are some lesser-known facts about Systematic Investment Plans (SIPs) in plain and simple English:

Flexible Investment Amounts: SIPs don't require a high fixed monthly investment. SIP can start with as little as ?500 per month.

Rupee Cost Averaging: SIPs use a strategy called rupee cost averaging. This means you buy more units of a mutual fund when prices are low and fewer when prices are high. Over time, this can reduce the overall impact of market volatility.

No Lock-In Period: Unlike some other investment options, SIPs typically don't have a lock-in period. You can start ormay stop your SIP at any time . (though it's generally recommended for the long term).

Tax Benefits: Some SIPs, like Equity Linked Saving Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act in India. This can help you save on taxes while investing. However ELSS schemes are locked in for a period of 3 years. 3 years is calculated from the date of the each contribution and not from the start of the sip.

Long-Term Focus: SIPs are best suited for long-term financial goals. They encourage a disciplined approach to investing, which can help you achieve your objectives over time

Compounding Benefits: The power of compounding is a significant advantage of SIPs. By reinvesting your returns, you earn returns on your returns, which can significantly boost your corpus over the long run.

Variety of Funds: SIPs are not limited to just one type of fund. You can invest in equity funds, debt funds, hybrid funds, and more, depending on your risk tolerance and financial goals.

Auto-Debit Facility: Most SIPs offer an auto-debit facility, making it convenient to invest regularly. The money is automatically deducted from your bank account on the chosen date.

Professional Fund Management: When you invest in a mutual fund through SIPs, your money is managed by professional fund managers who make investment decisions on your behalf.

Dividend and Growth Options: SIPs typically offer two options: dividend and growth. In the dividend option, you receive periodic payouts, while in the growth option, your returns are reinvested.

Low Minimum Investment: Some mutual funds allow you to start a SIP with an initial investment as low as ?500 to ?1,000, making it accessible to a wide range of investors.

Quarterly Investment : You may invest quarterly in sip. Like monthly there is a provision for Quarterly sips as well.

Remember, while SIPs can be a convenient and effective way to invest, it's essential to choose funds that align with your financial goals and risk tolerance. Diversifying your investments across different asset classes and regularly reviewing your portfolio are also important aspects of successful SIP investing.