A Systematic Investment Plan (SIP) is a mode of investment for mutual funds in which investors make regular, automated contributions periodically. With SIPs, you can plan your investments to achieve your financial goals over the long term. You can do this by determining the target amount and the amount you’d like to invest at periodic intervals in a mutual fund scheme you’ve chosen.
For instance, say you’d like to invest â‚¹500 each month for five years. You can set up a SIP with a mutual fund and automate your contributions for the said period. You can also choose to contribute more or less frequently. Typically, SIP mutual funds allow investing weekly, monthly, quarterly, semi-annually and so on.
It’s also important to understand the SIP meaning in mutual fund because it’s not an asset in itself, but only a mode of investing in mutual funds. Any contributions you make towards your SIP will be invested in a mutual fund scheme that you choose.