Wednesday, September 27, 2023

What Is SIP and How Does it Work


Through SIP, an investor or a common man can continuously invest a fixed amount from his savings in any profitable mutual fund scheme every month or at a fixed interval. SIP is a simple and disciplined way to grow your wealth in the future in a disciplined manner.

The money invested just gives you just enough money from the big net of inflation. If you invest in a mutual fund scheme little by little. Then it also protects you from the big risks of the stock market. Due to this, the risk of sinking your capital is also very less or not equal.

Through SIP, if you invest your money continuously in a mutual fund scheme, then after a gap of a few years, you start getting interested in the return or interest of your money. This proves to be a very win-win situation for you. is Because through SIP, your money is safe and you get more return or interest on it than bank or normal FD. Which is necessary to beat the rising inflation.

SIP Full form

Systematic  Investment Plan”

How does SIP work?

Whenever you invest in a sip. That SIP plan buys some units of mutual funds for you every month. Which can be less or less according to the fluctuations of the stock market. It keeps on happening more and more.

Benefits of SIP

  1. Investing in small amounts: – The first advantage of investing in SIP is that you do not need to deposit a large amount. You can invest in SIP in small amounts.
  2. Reduction in Investment Risk: – By investing in SIP, you can avoid many types of risks related to the stock market and you can reduce the investment risk of your money to zero by taking a good Mutual Fund scheme. Because if you bought a share directly from the share market with a large amount of money and you had any hope that it would move forward but instead of becoming a share, it decreased, then all the money you invested in that share could be at risk.
  3. Tax Exemption: – The biggest advantage of investing in SIP can be that you will not have to pay any kind of tax while investing and not while withdrawing Rakhi if you invest in SIP of lock-in period in which at least you have to invest for 3 years.
  4. Advantage of Compounding Effect: – Compounding Effect in SIP means that you also get interested in the interest received on your invested money. Because when interest is made on your money, then that interest money is also re-invested by mutual funds, which increases the profit, and a huge increase in the profit received on the invested money is seen.

5. Disciplined Investment:- When you invest in a SIP. It disciplines you and your money in investing so that you do not get greedy and invest in the wrong places and this discipline makes you invest further. Makes it a disciplined habit to make saving the amount you want to make, so that you can exercise control over both savings and investments.

How to invest in SIP

How to invest in SIP:- When you have come to know what is SIP and how SIP works and what are the benefits of SIP. Then after knowing all this in your mind This question must be raised how you can invest in SIP, let me tell you that investment has become very easy in this digital India.

You need some important documents to start SIP such as;-


BANK PASSBOOK OR CHECK Because all the information related to the bank or account is in your BANK PASSBOOK OR CHECK.

When you register on any website or app to buy something like this, Then you need KYC, which means you have to give information about your date of birth, mobile number, and address proof, and nowadays everything has become digital, due to which With this you can also do E-KYC.

Read More about How to increase the CIBIL score, and what is CIBIL score

After completing the KYC process. You can invest in SIP through an App or Website, such as some of India’s main Apps or Websites such as – Sherkhan, Groww, Zerodha, upstox, etc. with help of which you can invest in SIP.

You just have to allow these brokers or apps to withdraw money from your bank and invest in SIP which you can do through the AUTOPAY facility.

All of you must now have come to know what is SIP and how it works and how to invest in it. Along with that, this question must be coming to your mind whatever investment you make. There will be a desire to know the future benefits or returns. Which you can know through SIP Calculator.

What is SIP Calculator

SIP Calculator is a kind of calculating tool by which you can calculate your monthly SIP and the returns you will get. Just you have to enter your monthly SIP Amount and you have to enter the year in which you invest.

If you have put 1000rs in a monthly invested amount in it and you have chosen years and 10 years and assumed interest rate is 8% then this calculator will tell you how much return you will get in 10 years. Now you must have come to know what is SIP Calculator

I hope that now you have understood what is SIP, what is the full form of SIP, how it works, and what are the benefits of SIP. If you liked this post. Then you can share it with your friends. And you can give information related to this to as many people as possible. Hope you have liked this block post.

Read More What is Digital Rupee, how can you use it

Related Articles


Please enter your comment!
Please enter your name here

Latest News