Equity vs Debt Funds: Key Differences
How equity and debt schemes differ in what they hold, how they behave and the risks involved.
Read articleWhat Is a SIP and How Does It Work?
A simple look at Systematic Investment Plans, rupee cost averaging and the role of time.
Understanding a SIP
A Systematic Investment Plan (SIP) is a way of investing a fixed amount in a mutual fund scheme at regular intervals, usually monthly. Instead of investing a large sum at once, you invest smaller amounts over time.
Rupee cost averaging
Because the amount stays fixed while the NAV moves, you buy more units when prices are lower and fewer when prices are higher. Over time, this can average out your purchase cost. It does not guarantee a profit or protect against loss in falling markets.
The role of time
Compounding works best over longer periods. Staying invested through market cycles, rather than stopping during volatile phases, is often discussed as an important habit for SIP investors.
Things to keep in mind
Choose schemes after reading the Scheme Information Document, check your risk profile, and review your investments periodically. Mutual fund investments are subject to market risks.
This article is for general information and investor awareness only and should not be treated as a recommendation. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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