SIP or systematic investment plan is not a mutual fund product, but a mode of investment via which individuals can invest in the mutual fund scheme of their choice. Here is how a SIP works in simple words:
- An investor decides upon a fixed amount (as low as INR 100 – INR 500 per month) and chooses to invest it at regular intervals of time (weekly, monthly, quarterly, biannually or annually).
- This predetermined amount is invested in a consistent manner in a mutual fund scheme, which pools in money from like-minded investors and invests it in various securities as per the scheme’s objective.
- Over time, as the SIP continues, it allows investors to get a step closer to achieve their financial goals by typically receiving returns that are commensurate to the risk involved.
The NAV or net asset value refers to the value per unit of the scheme on a particular day. You can ascertain the value of your investments by multiplying the NAV with your unit balance. In terms of SIP, your investment issues units to your portfolio at the NAV that is calculated on the day of investment. You can find a suitable mutual fund investment scheme on the basis of your financial goals, your risk appetite and your time horizon. You can also consider utilizing the SIP calculator to help you determine your investment journey.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.