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A systematic investment plan is a process of investing by making regular equal investments in a mutual fund, fixed deposit, or stocks. Systematic investment plans (SIPs) are more popular with mutual funds. The frequency of equal investments in a SIP can either be weekly, monthly or quarterly.
One can choose to invest as little as Rs.500 via the SIP route. There is no real upper limit for a SIP. Many platforms set the upper limit by default to Rs.25000. However, it is possible to make SIP investments of Rs.1 lakh or even Rs.5 lakh. It all depends on the financial goals of the investor.
SIP investing is different from a one-time lump sum investment. A one-time investment is very time-sensitive, and a market crash can cause major losses. A SIP, on the other hand, protects the investor from market crashes. In fact, market crashes are good with SIP investors because they get to buy more units of lower NAVs with the same amount of investment money.
Read more about the Systematic Investment Plan (SIP)
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