Advantages of investing in SIP

The dabbling in the stock market is not everybody’s cup of tea. There is a chance that you may burn your fingers. As an investment in the stock market requires a certain amount of knowledge & expertise about shares and functioning of the stock market. Mutual Funds offer you an opportunity to invest in the stock market and reap the benefit of higher returns. The most popular way of investment in the any Mutual Fund is investment through Systematic Investment Plan, popularly known as SIP.SIP has emerged as the most disciplined way of investment in the stock market through Mutual Funds. Sip Karo Mast Raho


SIP is the simplest and easiest way of investment in the stock market through Mutual Funds. The functioning of the SIP is similar to Recurring Deposits Scheme of a Bank. But SIP has certain advantages over bank RD. Every month you can invest a certain amount in SIP. You can start with as little as Rs 500 pm. After pooling the amount from various investors amount is invested in various Mutual fund schemes i.e. Equity or Debt.MF is managed by professionals called fund Manager. Investors get the professional services in managing the funds and get a better return on their investment to build a handsome corpus over a period of time.



SIPs have certain inherent benefits over RD and other investment avenues. The following are the major benefits of SIP:

  1. It offers you freedom of investing in Daily, Monthly and Quarterly basis. It is like putting money in a Piggy Bank as and when we have money, just like we did in our childhood.
  2. You can start a SIP with as little as Rs 500 pm. You may also top up with an extra amount as per availability of fund with you.
  3. The investment is hassle-free. An amount is debited to your Bank account every month on a specified date through ECS. You need not to visit Mutual fund office to pay SIP installments.
  4. Paperwork is simple to open a SIP account. You have to provide KYC (Know your customers) documents like PAN Card and Aadhar Card, which normally we all are having. Now there is a facility of registering your KYC documents with Central Registry. Once it is registered there, you need not to submit KYC documents every time at the time of opening of fresh SIP or MF investment. Nowadays all MFs are registering KYC documents of their investors with the Central Registry to avoid obtaining KYC documents every time.
  5. All MFs provide the facility of online handling of investors account. You can monitor your investments online. You can rejig your investment. You may switch over to other scheme or you may exit also any time.
  6. It offers easy liquidity also.MFs declares Net Asset Value(NAV) of their various Schemes on their websites. You can easily find out the present value of your investment and may redeem the present value of your fund any time. The amount is credited to your account on T+1 basis i.e.Transaction day plus one day.
  7. You may get the benefit of Long-Term Capital Tax (LTCG) on your investment. In Equity fund, LTCG up to Rs 1.00 lac is exempted and beyond Rs 1.00 lac it is taxed at @10%.In the case of Debt fund indexation benefit is allowed if redeemed after 3 years,
  8. You may invest any time irrespective of booming or down market conditions. One can invest any time without looking at the market position.
  9. It enables averaging of Rupee cost of investment. As investment is made regularly at various level of markets.
  10. It enables to build a huge corpus over a period as per your financial planning. SIP investments also enjoy the benefit of compounding.

SIP is a convenient mode of investment in Mutual Fund Schemes. But it requires a certain amount of discipline in your financial planning. You have to invest regularly as per your investment horizon and risk appetite to meet your financial goal in long term.

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Chalo Niveshak

We are financial Advisor based at Ahmedabad. having a vaste experience of more than 10 years in financial sector. More than 500 families are happily enjoying services provided by us in their financial planning journey. We are also associated with more than 10000 financial advisors accross India and discussing about various needs and problems of investors. so we know how to deal with various objectives of various goals of our investors better than others.

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