SIP (Systematic Investment Plan) is a method of investing a fixed sum regularly in mutual funds. It helps inculcate a habit of saving and building wealth over time through the power of compounding.
SIP Formula
M = P ร [(1 + i)^n โ 1] / i ร (1 + i) Where: P = Monthly investment, i = Monthly rate, n = Months
What is the minimum SIP amount?
Most mutual funds allow SIP starting from โน500 per month. Some funds allow even โน100 per month.
Is SIP better than lump sum?
SIP is better for regular investors as it averages out the cost (rupee cost averaging) and reduces market timing risk. Lump sum can be better when markets are low.
Can I stop SIP anytime?
Yes, you can pause or stop your SIP anytime without any penalty in most mutual funds.