Systematic Investment Plan (SIP)
Systematic Investment Plan (SIP) is a convenient way to accumulate wealth in a disciplined manner over a long-term period. It helps you to invest regularly in small installments and thereby build wealth over a period of time.
SIP is a method of investing in a mutual funds scheme. Mutual fund schemes are offered by the Asset Management companies (AMC) to customers through a distributor. The Bank acts as a distributor of Mutual Fund products for the AMC to the customers. A customer wanting to invest in a mutual fund scheme can avail of the Systematic Investment Plan option through Axis Bank.
Advantages of SIP
Power of Compounding
SIP helps you to start investing at an early age to meet the greater expenses of your life. Saving a small sum of money regularly makes money work with greater power of compounding with significant impact on wealth accumulation.
Rupee Cost Averaging
SIP minimizes the effects of investing in volatile markets. It helps you average out your cost by generating superior returns in the long run. It reduces the risk associated with lump sum investments. Since you get more units when the NAV drops and fewer when it rises, the cost averages out over time Thus the average cost of your investment is often reduced.
Convenience and Regularity
SIP gives you the convenience to pay through Axis Bank Electronic clearance service (ECS) or Auto Debit. You can decide the amount and the mutual fund scheme. A fixed amount will automatically get debited from your account on a date specified by you.
Disciplined approach towards investment
Since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation. Disciplined investing is vital to earning good returns over a longer time frame.
How to invest in SIP?
Step 1: Select a mutual fund scheme of your choice with the payment option as SIP
Step 2: Decide the Investment periodicity (frequency of making payments). You can choose to make your investment on a monthly or quarterly basis.
Step 3: Select the minimum investment amount. For instance, if you choose to invest Rs 60,000 every year with a monthly SIP Option. Therefore you would be investing Rs 5,000 every month in your fund. By the end of a year, you would have invested Rs 60,000 in your fund.
Step 4: The amount gets converted into units, depending on the Net Asset Value (NAV). NAV is the market value per unit of a fund. If the NAV in the first month is Rs 20, you will get 250 units. Similarly in the next month if the NAV is Rs 25, you will get 200 units. The following month if the NAV is Rs 18, then you will get 277.77 units. So, after three months, you would have 727.77 units. On an average, you would have paid around Rs 20.6 per unit.
Step 5: The units get accumulated over a period of time. You can stay invested till the time you wish and redeem your units when you wish to exit from the scheme. The units are redeemed at the market value (NAV) and you get back your money with returns.
For investing in SIP, all you need to do is visit your nearest Axis Bank branch and just fill up a simple application form. You can also fill in your personal details on the "Apply Now" link on our website and our relationship manager will get in touch with you shortly.
Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing