How Does SIP Works

SIPs or Systematic Investment Plans are  a disciplined way of investing. SIPs work on the principle of accumulation or creating wealth by investing a fixed amount at regular intervals over long investment periods.

By investing a fixed amount, one gets the advantage of Rupee Cost Averaging which averages out the cost of purchasing units over the entire investment period. This is achieved when markets are down you get to purchase more number of units and when markets are up lesser units are purchased. The benefit of SIPs only happens when investing for the long term as Compounding takes effect on investments. Overall, SIPs turn out to be a great tool for investing as they balance risk and return in the most optimal manner.