Basic Information about SIP ( Systematic Investment Plan )
Most of the readers might already be familiar with all the facts about what a SIP is, and what are the general benefits of SIP, etc. But when a book is written, it is very important to include the basic information about the subject so that it can be easily understood by all the categories of readers.
I request all the readers to read each chapter because no matter how knowledgeable one is, the possibility of getting some new information is endless. You can also get some new ideas from the initial information about a SIP:
The literal meaning of SIP is ‘Systematic Investment Plan', ie, SIP is actually the short form of Systematic Investment Plan. It means planning investment in a systematic manner.
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| Financial Freedom Thru Miracles of S.I.P |
SIP is widely used in Mutual Funds. Mutual Funds are a type of collective investment. In this, groups of investors invest in stocks or securities together.
In an SIP, a fixed amount is invested in a mutual fund at a fixed time interval, such as every month or every three months or every six months.
SIP has been found to be the safest, easiest and most profitable system among all the systems that have been discovered for investment in the world till date. Further in this book, you are going to learn how much power is hidden in this seemingly simple system.
In the olden times when mutual funds were not so popular, even middle-class people used to save money by SIP through recurring deposit accounts or RD.
SIP is also called the ‘Dollar Cost Averaging’ method. According to this, if you want to invest $1,000 in a share/ mutual fund unit and you have two options, either you invest all $1000 together or the second option lets you invest $10 in a month and invest $1000 in 100 months. If the market is down in this type of SIP investment, then you get more shares/units and if the market is up, then you get less shares/units. But from past experience, it is almost always seen that during the period of 100 months,ie, about nine years, you always stand to gain more profit than buying outright because firstly, you do not have to invest 1000 dollars at once. The remaining amount can be kept in fixed deposit. And during 9 years, you keep getting good interest from it.
Anyway, the only thing to keep in mind here is that Dollar Cost Averaging and Systematic Investment Plan work on the same principle. Summary
1. Most of the investment methods that have been discovered so far are based on SIP or Dollar Cost Averaging. Even my method of swing trading by averaging up to 9 times with Darvas Box theory uses the same technique.
2. SIP is the easiest and safest way to invest.
3. An SIP of a duration of at least 9 years is necessary to get or earn profit in the true sense and for proper comparative study. Real and effective benefits are visible in SIPs above 12 years.
4. If you do not have an urgent or a special need, then you should not discontinue the SIP plan before a period of 9 years.
Prabhat Prakashan releases the book Financial Freedom Thru Miracles of S.I.P by Mahesh Chandra Kaushik. The Book is available On both Amazon and Flipkart.
Author - Mahesh Chandra Kaushik
ISBN - 9788184306392
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