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Did you know that you invest in mutual funds with an amount as low as Rs 100 per month via Systematic Investment Plan (SIP). The mutual fund industry took this decision to tap into a larger number of retail investors. Before we understand why the mutual fund industry chose to do that and how it has affected retail investors, let’s quickly recall what is SIP.

What is SIP?

SIP is a disciplined and systematic way available to retail investors to invest in mutual funds. Under this mode of investment, an investor allocates a fixed or variable amount of money (depending on the type of SIP chosen) at regular intervals for a fixed or infinite period of time (depending on the type of SIP). Most common frequency of intervals are monthly. Other periodic intervals are daily, weekly, semi-annually, or annually. SIP investments allow investors to enjoy several benefits, some of these are:

  • With the help of SIP investments, an investor enjoys the benefits of the power of compounding. This helps them to create greater wealth over prolonged duration of time.
  • Disciplined and regular way of investing which is important to invest in mutual funds. This inculcates the habit of regular investing among investors
  • As investments in SIP mutual funds are made on a regular basis, an investor ends up buying mutual fund units at different phases of the market. In essence, an investor buys more units of the scheme when the markets are down and vice-versa. This results in averaging out the total cost of mutual fund units bought. This is known as rupee cost averaging.
  • An investor can invest in mutual funds online via SIP from the comfort of their home.
  • SIPs are very pocket friendly. As mentioned above, investors can invest in mutual funds an amount as low as Rs 100 per month. 

Why did mutual fund industries announce the Rs 100 SIP mutual fund schemes?

With the introduction of Rs 100 SIP mutual fund schemes, the mutual fund industry has successfully taken the micro-SIP revolution to parts of rural regions in India. This allows even daily wagers to invest their savings in SIP mutual funds, making it affordable for investors who could not dream of investing their money. This has benefitted the mutual fund industry as well as more are able to invest their savings in mutual funds through SIP mode of investment. 

Conclusion

Being able to invest a sum as low as Rs 100 per month via SIP investment is one of the most amazing features of mutual fund investment. When you lower the minimum requirement to invest in mutual funds, it has a direct impact on the territory of mutual funds. This is extremely beneficial for different segments of individuals in the society such as young professionals who have recently started earning, economically backward sectors of the society, and even students who receive pocket money from their parents. Now, that you have understood you do not have to invest a significant amount to invest in mutual funds, what are you waiting for? Go invest today in SIP mutual funds and grow your wealth in a systematic and planned way. Happy investing!