ES AI PEE, is quite a popular term.
Actually it is SIP !
SIPs or Systematic Investment Plan has become very popular because of the blitz of advertisements which have been released in media.
While we have seen what a mutual fund is. Many times a SIP is mistaken as a mutual fund scheme.
To know what is a mutual fund click on the link below.
We have understood what a mutual fund is.
Then what is an SIP?
All of you might have used an Piggy bank when you were young.
Every month or week when you would get some pocket money, a part of it would go in the piggy bank. This inculcated a habit of saving. Also when the piggy bank was pried open, a princely sum would be made available which would then be used for some unattainable toy.
Or if some parents were more progressive, a savings account would be opened and the saved sum would be deposited in it. First lesson in finance. ?
A SIP is similar.
Every week,or month or quarter whatever suits the investor a standard sum is invested in a particular scheme of mutual fund.
It may be easier for salaried people. Every month when they get their salary automatically a sum is invested. It idiotises the process
Also the choice goes out of the hands of the person . To invest or not to invest. To spend this month or to save ?
People invest as low as Rs.500 to lacs per month.
It also helps to average costs as market goes up and down.
It is a good practical way to invest.
But it is not the only way to invest. If you get a bonus and have a lumpsum , you can invest all of it at a go.
If you are experienced investor and you feel that the level of the market is good, then choose a scheme and bam.
Or if you think market may go up and down then you can invest by bits and pieces slowly every month market via a SIP.
No Comment