Know Everything about Equity Systematic Investment Plan (Equity SIP)

What is Equity Systematic Investment Plan (SIP)

Equity SIP enables investors to purchase determined shares periodically in a systematic manner. Know what is equity SIP, features & how it works. Keep reading at Karvy Online.

Equity SIPs allows investors to systematically purchase certain shares, through periodic payment, either weekly or monthly. This is especially beneficial for salaried investors who prefer to build a long term portfolio in stocks without investing a lump sum.

Features of Equity SIP

The following features of SIP make it one of the most sort after investment opportunity for equity market:

• Based on the concept of Rupee Cost Averaging
• Simple and disciplined approach towards investment
• Can be started with a small amount of money invested at regular intervals
• Flexibility in terms of amount, time period and quantity

Types of Equity SIP

Amount based SIP: It is calculated by dividing SIP amount by Market price per share.A type of SIP where-in a fixed amount is invested in the select share for a specific time period as decided by the investor.

Quantity based SIP:It is the type of SIP where-in a fixed quantity of shares is purchased for a specific time period as decided by the investor.

Benefits of Equity SIP

SIP is a viable investment option for small investors. They provide the following benefits:

• Minimizes volatility risk
• Simple and disciplined approach towards investment
• No additional charges and no entry/exit load
• Long-term financial goals can be met with SIP
• Harness the power of Rupee Cost Averaging and the power of compounding

How does it work?

Equity SIP is a flexible investment plan. As opted by the investor on the type of SIP (amount/quantity based) the amount is debited from your account and invested in the specific share.

Equity SIP also helps by avoiding the risk of buying shares at a higher price. They are ideally meant for long-term investors. The choice of stock should always be made based on the fundamentals of the company.