Systematic Investment Plan (SIP)
A way of investing a fixed amount in a mutual fund at regular intervals — usually monthly — instead of all at once.
A SIP automates investing: a set sum is invested on the same date each month, which spreads your purchases across high and low prices over time (an effect called rupee-cost averaging).
Because it is automatic and gradual, a SIP removes the pressure to time the market and turns investing into a steady habit that fits monthly income.
Key points
- Invests a fixed amount at regular intervals.
- Averages your purchase price across market ups and downs.
- Suits salaried, monthly cash flow.
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Related terms
The per-unit value of a mutual fund, calculated as the total value of its holdings minus expenses, divided by the number of units outstanding.
Compound InterestInterest earned not only on your original amount but also on the interest already added — so growth accelerates over time.
Expense RatioThe annual fee a mutual fund charges to manage your money, expressed as a percentage of your investment.
Index FundA mutual fund that simply tracks a market index, such as the Nifty 50, rather than trying to beat it.