What is SIP?

Systematic Investment Plan (SIP)

A Systematic Investment Plan (SIP) is an easy way to invest in mutual funds. Instead of making a one-time investment, you can invest a fixed amount regularly—say, every month. SIPs let you invest as little as ₹100 per month, making it affordable for everyone.

SIP works just like a recurring deposit, where a fixed amount is automatically deducted from your bank account every month. It’s a hassle-free method because you don’t need to write a cheque every time you invest.

SIPs are popular among investors as they encourage disciplined investing and help manage market ups and downs through a concept called Rupee Cost Averaging. They are one of the best ways to build long-term wealth without worrying about timing the market.

How SIP Works

Rupee Cost Averaging

SIP helps you buy more units when prices are low and fewer units when prices are high. Over time, this averages out your cost of investment.

For example:

• If you invest ₹1,000 when the NAV is ₹20, you get 50 units.

• If you invest ₹1,000 when the NAV is ₹10, you get 100 units.

• Total investment: ₹2,000 for 150 units.

• Average cost per unit: ₹2,000 ÷ 150 = ₹13.33.

This disciplined approach ensures regular investments, even during market highs and lows. However, Rupee Cost Averaging doesn’t guarantee profits or protect against losses in a declining market.

The Power of Compounding

Compounding is one of the greatest advantages of long-term investments. It means the returns you earn are reinvested, and those returns also start generating income, allowing your wealth to grow faster over time.

For instance:If you invest ₹1,000 every month at an interest rate of 8% for 25 years, your total investment of ₹3 Lakh can grow to ₹9.57 Lakh!

Why Start Early?

The earlier you start investing, the more you benefit from compounding.

Let’s look at an example:

• Person A starts investing ₹20,000 per month at age 25 until his retirement, age 60.

• Person B does the same but starts at age 35.

By the age of 60:

• Person A’s investment grows to ~ ₹13 Crore.

• Person B’s investment grows to ~ ₹3.8 Crore.

Starting early can make a huge difference to your wealth!

Why Use the Miles Wealth App for SIPs?

With Miles Wealth, starting and managing your SIPs is incredibly easy. You can:

1. Choose a mutual fund scheme from your personalised dashboard.

2. Set up a SIP with just a few clicks.

3. Track your investments and returns in real time.

Start your SIP journey today with Miles Wealth and watch your wealth grow over time!

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Disclaimer: This blog is for educational purposes only. The securities/investments mentioned here are not recommendations.

P.S. If mutual funds are on your mind, check out Miles Wealth! We make investing easy with personalised mutual funds tailored to your risk tolerance and financial goals. No need to be a finance expert or spend hours researching—just invest in funds that truly fit you. Download Miles Wealth today!

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