SIP Investment-Meaning-Examples-Features-characteristics-Advantages-Benefits-Disadvantages-Limitations-iBizMoney

What is SIP Investment with Example?

The principle behind systematic investing is straightforward. The method entails making recurrent purchases of a chosen investment vehicle, such as a mutual fund or stock. With dollar-cost averaging, you consistently invest the same amount of money in a security, regardless of fluctuations in its market price. Let us see what is SIP investment with example in this article.

When you enrol in a systematic investment plan (SIP), a portion of your monthly or quarterly bank deposit is automatically transfer to the mutual funds you selected. When you invest in a mutual fund, you will receive units valued at the fund’s NAV at the end of the day. You may receive more units for your money in an Indian SIP plan based on the prevailing market rate. A larger sum is being reinvested, and a larger profit is being made, with each successive investment.

What is SIP Investment?

Investing in mutual funds using a Systematic Investment Plan (SIP) involves investing a predetermined amount of money on a periodic basis into a mutual fund scheme of the investor’s choosing. As opposed to making one huge investment, which would yield a lower return, a SIP plan allows you to invest a small sum regularly over time.

Investors can set up a systematic investment plan (SIP) to contribute a certain amount to a mutual fund, trading account, or retirement account like a 401(k) on a regular schedule (k). Through SIPs, savers can reap the long-term benefits of dollar-cost averaging. While still maintaining the discipline to save on a consistent basis with lesser sums of money (DCA). Direct cost amortization (DCA) is a method of investing in which a certain amount of money is payable into a security on a regular basis. This aids the investor in accumulating assets and/or income gradually.

Example of SIP Investment

The returns on a systematic investment plan (SIP) can be distribute either at the end of the term or at predetermined intervals, at the investor’s discretion. Here’s a case in point so you can see what I mean: Let’s imagine you’ve set aside 1,000,000 INR (Indian Rupees) to invest in a mutual fund. Two options are available for making this investment.

A “lump sum investment” in the mutual fund would be 1,000,000 rupees. A Systematic Investment Plan, or SIP, is another way to put money to work. A minimum amount is require to initiate a SIP. Say Rs 500. After that, Rs 500 will be automatically sent from your bank account to your chosen mutual fund on the first of every month. It will continue like this till the specified time.

T. Rowe Price’s SIP product is refer to as Automatic Buy. Depending on the type of account, investors can contribute as little as $100 per month into the account after the initial commitment to start up the account (often $1,000 or $2,500). Individual retirement accounts (IRAs) and conventional accounts commonly use it only to buy mutual funds, with stocks not eligible.

The money can be taken straight out of one’s checking account, taken out of one’s pay, or if you’re withdrawing it from your Social Security check. There are “no checks to write or investment slips to mail,” as the company’s website puts it. Everything will be handled by us.

Benefits of SIP Investment

A Systematic Investment Plan is one of two techniques to invest in mutual funds. A single sum of money can also be invested. Simply put, a systematic investment plan (SIP) is a method of investing money on a regular basis, such as monthly. There is a base investment requirement for each mutual fund. If you’re trying to decide which SIP is right for your needs. You may discover a variety of calculators online to help you out. Find out why SIPs are so popular by reading on. Let’s find out what makes SIPs so appealing.

Begin with a Small Amount

With SIP, you can begin investing with as little as 500 Indian Rupees (INR) per month. You can participate in the growth of the Indian stock market through SIP plans in various mutual funds. Even if you do not have a large disposable income or a large savings account.

Relax about Timing the Market

With SIP plans, you may invest regularly without worrying about buying low and selling high. For the same amount of money, you will receive fewer shares when the stock market is at an all-time high, and the opposite is true when the market is low. So, averaging does help and, in the long run, your investments will be evenly distributed.

Free to Terminate at any Time

It is typical for SIPs to have no early withdrawal fees or penalties. You can cancel your Demat subscription at any time. This is not a perk of more conventional investments like Fixed Deposits or Recurring Deposits.

Start the Math Game Early

To the initial investment you make in a SIP, you can expect to receive monthly return on investment until the SIP matures. As a result, compounding has an effect on the value of your investment over time, allowing it to increase at an exponential rate.

Create a SIP Investment When Possible

You may start investing in mutual funds that focus on investing in different fields if you obtained a raise or started making more money each month. Consequently, you can begin investing your spare cash and reaping the rewards.

Avoid Mixing Finance and Emotional

Never let your emotions influence your investment decisions; this is especially crucial when dealing with the stock market. The stock market, in general, is in a state of constant flux. Be deliberate and don’t rush decisions in response to the current market. Furthermore, SIPs have a significant impact in this field. The ability to remain unaffected by the market’s short-term ups and downs depends on your ability to maintain a consistent investment strategy.

Monitor Past Performance

Those who invested in mutual funds 15 years ago are reaping substantial financial rewards. Let’s have a look at some examples. If you had begun a systematic investment plan (SIP) of $3,000 per month in a mutual fund 15 years ago, you would have invested roughly $5.4 lakh by now. Simultaneously, you would get back a stunning $35 lakh on your investment.


If you want to reap the rewards of compounding, you need to hold onto your investments for a while. Put money away early on in life to avoid having to do so later. Rome wasn’t built in a day, and Buffet had to wait until he was 50 before he became rich.. To invest wisely and consistently over time, a SIP investment (systematic investment plan) is a great option.