What is SIP?

Systematic Investment Plan enables you to build a portfolio over a longer time horizon with small investments at regular intervals reducing the risk of market volatility. You can choose between Quantity based and Amount based SIPs in Stocks, Mutual Funds, ETFs and Gold.

Amount Based and Quantity Based SIP

Amount based SIP – It’s a type wherein a fixed amount (decided by you) is invested in your selected share at pre-defined frequency.

Formula for calculation of Quantity is SIP Amount / Market price of the share. Any fractional value will be ignored and order will be placed for the remaining quantity.

Quantity based SIP - It’s a SIP type wherein a fixed quantity of shares of your desired company is purchased at pre-defined frequency.

In Quantity based SIP, quantity to be purchased would specified by you and would be fixed while placement of orders as per your desired frequency. The order value is calculated based on the prevailing market price of the scrip at the time of order execution.

Features of SIP:

For long-term wealth creation through equity market you need discipline and long term time horizons which are inherent features of SIP. The following features of SIP makes it fit for equity market.

• Simple and disciplined approach towards investment
• Investment possible with small sum of money invested regularly to accumulate wealth
• Based on concept of Rupee Cost Averaging.
• Flexibility in terms of Amount or Quantity based SIP
• Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly basis

Benefits of SIP:

As common investor doesn’t have enough time and resources, SIP proves to be a viable option for them. Listed below are the important benefits of this instrument.

• Reduces Risk because of Rupee Cost Averaging
• SIP can be started with very small amount of money
• Timing the market is not necessary
• Long term financial goal can be aligned with SIP
• Disciplined approach towards Investment helps in controlling the emotions