A SYSTEMATIC WAY OF MAXIMISING RETURNS ON INVESTMENT

Prelims level : Economy – Misc. Mains level : GS III - Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
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About:

  • A Systematic Investment Plan (SIP) is a way to invest in mutual funds wherein a fixed sum of money is put into a mutual fund scheme at a specified date every month.
  • It is considered to be investor-friendly and an efficient manner of investing in the capital markets. From this, one can start investing with small monthly contributions instead of building a huge investment corpus.

Benefits:

  • SIPs capture every rise and fall of the market and hence, an investor need not worry about the level of the market. there are sector-specific funds such as pharma, banks, technology, and also those based on the size of the companies such as large-cap, mid-cap, small-cap
  • funds that allow the investor to have a diversified portfolio rather than concentrate risk in a few companies
  • It is considered to be investor-friendly and an efficient manner of investing in the capital markets.
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