Definition of Terms
Term
It is the acronym or short form for Systematic Investment Plan. It is an option offered by Mutual Funds so that investors can make regular, periodic investments in a mutual fund scheme. Normally in an SIP, investments are made monthly.
The minimum threshold for SIP investments is also kept low (at Rs. 1000 or Rs. 500, and now, even Rs. 100), so that small investors can form a habit of regular investment.
The SIP method results in superior returns as compared to a lump-sum one time investment, as it takes away the element of timing of the market and benefits from Cost Averaging.
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