SIPs are regular investments, which can be scheduled at a predefined day every month.
SIP amounts are withdrawn automatically out of your bank account.
This makes your savings more disciplined as your savings are withdrawn even before you plan your expenditure for the month.
Rupee Cost Averaging
All your savings through a SIP are safeguarded by Rupee cost averaging.
Rupee cost averaging helps you overcome market fluctuations and volatility.
A SIP automatically allocates you more units when stop prices take a dip, and reduce your units if stock prices rise thereby, averaging out your savings.
Power of compounding
SIPs boost your savings by reinvesting your gross investment.
SIPs also average out the cost of buying Mutual Fund units.
The earlier you start, the better it is as you can benefit from the power of compounding.
Small Ticket Size
If you try to build a diversified portfolio with all types of stocks by buying them directly, you’ll need a relatively large sum of money- at least several thousands to begin with.
In Mutual Fund, you can start by owning the same with a few thousand rupees.