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SIP stands for systematic Investment Plan. an SIP is a smart way of investing in Mutual funds. it is an approach of investing in preset fixed amount at regular intervals (monthly, quarterly, ect.). SIP investments helps in building corpus for future wih planned appoach towards saving and investments.
An SIP is a flxible and easy investment plan. your money is auto ebited from your bank account and invested ino a specific mutual fund scheme you are allocated certain n umber of units based on the ongoing mnarket rte (called NAV or net asset value) for the day. every time you invest money, aditional units of he scheme are purchased at the market rate and added to your accoiunt hence units are bought at different rates and investors benifit from rupee-cost averaging an the power of compounding
with volatile market, most investors remain skeptical about the best time to invest and try to time their entry into the market. SIP investment allows you to opt out of the guessing game. since you are regular investor, your money fetches more units when the price is low and lesser when the price is high. During volatile period, it may allow you to achieve a lower average cost per unit.
Albert Einstein once said, “Compound intrest is the eighth wonder of the world. He who understands it, earns it...he who doesn’t...pays it.” The rule for compounding is simple - the sooner you start investing, the more time your monry has to grow.
If you started investing Rs, 10,000 a month on your 40th birthday, in 20 years time you would have put aside Rs. 24 lakhs. if that investment grew by an average of 7% a year, it would be worth Rs. 52.4 lakhs when you reach 60.
However, if you start investing 10 years earlier, your Rs. 10,000 each month add up to Rs. 36 lakhs over 30 years. assuming the same average annual growth of 7%, you would have Rs.1.22 Cr. on your 60th birthday-more than double the amount you would have recieved if you had started ten years later!
|SIP (1000 per month)|
A systematic investment plan (SIP) is a way in which an investor invests a fixed amount of money on preset intervals for a specified period. whereas, in a lumpsum investment, an investor invests his money in one go. but it is very difficult for an investor to time the market. SIP helps you in reducing market volatility as it works on ‘Dollar cost averaging’. An investor gets more units when the NAV is low and less when the NAV is high, and eventually the cost will average out. We will expalin in below example why SIPis better than lumpsum investing.
Let’s assume an investor invested Rs. 36,000 in BSE Sensex in january 2008 and another investor startedSIP of Rs. 1000 per month in BSE Sensex. The 2008 crisis dragged the market below 9000 in February 2009. it is evident from the chart that the lumpsum investor recovred his money only after 3 years. while the other investor, who started the SIP, made ~ Rs. 50,800 during the same period because of ‘Dollar cost averaging’.
The SIP investor was able to make money because he was getting more number of units when the market was falling and when the market started recovering he started making profits because his average cost was low.
|Lumpsum||SIP (1000 pm)|
|Period||36 months||36 months|
The SIP payment is auto debited from your account every month. This is a disciplined method of investing and inculcates a habit of saving among people.
SIP works best for people who want to create wealth over a longer period of time, by not blocking their funds, Since it is difficult to invest a lumpsum amount in one go, SIP helps a person to invest small amount at regular intervals.
Bank manadte is an instruction to your bank to transfer money to 5paisa on a regular basis to fulfill all your investment plan(SIP) registered with us.
It helps in effortlessly transferring money to us without you going to internet banking portal every time. At the same time mandate can help to start many SIPs without any additional paperwork.
Mandate amount of Rs. 50000 is an instruction to your bank to transfer money to 5paisa. please note it is just an indicative maximum amount upto which you can transct. the amount that will actully be deducted from your bank account will depend solely on your monthly SIP investments.
just submit a request to us to create a new mandate through the app or 5paisa website and you will receive a PDF of the mandate. this has to be printed and signed by you and sent to us on the below mention address-
5paisa MF Operations
Sun Infotech Park,
Road No. 16V,
Plot No. B-23
Thane Industrial Area,
Wagle Estate, Thane - 400604
It takes approximate 10 days for the mandate to get approved and activated from your bank.
If mandate is active then SIP can be started in 7 days from the date of the SIP registration, in case a new mandate is created or it is still under process SIP will be started from the next month to avoid any miss / failed installments.
In case if you want to invest in funds recommended by 5paisa please follow the below path
In case if you want to make goal based SIP investments please follow the below path
In case if you already know funds in which you want to invest follow the below path
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